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Stamp duty holiday 'not a success'
Friday January 1st 2010
Estimates on the cost of the stamp duty holiday, introduced in September 2008, suggest the scheme has not been as successful as the Government would have hoped.
The Treasury introduced the scheme for a period of 12 months, but extended it until the end of 2009.
Under the stamp duty holiday, tax only becomes payable on properties costing more that £175,000 rather than the previous level of £125,000.
But the Council of Mortgage Lenders (CML), the industry's trade body, estimates that the total cost of the scheme in the initial 12-month period was £356 million - well below the £615 million the Treasury had planned for.
This rises to just under £500 million when the extension of the scheme is taken into account.
James Tatch, CML senior statistician, said: "We may see some surge in activity at the end of the year as borrowers rush to beat the deadline on the stamp duty concession before it ends.
"This may bring the total benefit to consumers and cost to the Treasury nearer the Government's original estimate, but there is no realistic chance of the Government 'spending its budget' on this by the end of the year."
The increase in the stamp duty threshold meant that 57% of people buying a property with a mortgage were exempt from the tax during the first three months of the year.
But modest house price increases, combined with a shift in the mix of homes being bought towards higher value properties, reduced the proportion of people who were not liable for the tax to 51% during the third quarter.
Copyright © Press Association 2009
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