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Stamp duty threshold change 'needs to go further'

4 September 2008

Stamp duty threshold change 'needs to go further'

movewithus has today called on the Government to urgently re-consider the increase in the stamp duty threshold and extend it to £250,000.

Robin King, founding director of movewithus, said, “The increase in the stamp duty threshold has naturally been welcomed but it will fall a long way short of having the desired effect of kick starting the property market and could be a catalyst for worsening conditions.”

movewithus believes that the move will have a significant impact on the 20 per cent of houses currently valued between £180,000 - £200,000, predicting that these properties will experience a major reduction in their value to be eligible for the new stamp duty exemption.

King commented: “The Government should not delay in raising the stamp duty threshold to £250,000, in order to allow people throughout the UK to benefit from the change and to steady the market at a crucial time.”

According to movewithus, the fundamental issue preventing a recovery in house sales at present is not the stamp duty threshold but buyers’ inability to secure a deposit. 

King remarked: "The ‘free 30% loans’ initiative, which is currently only open to first-time buyers who purchase new homes, should be extended to include all properties, giving first-time buyers more choice and injecting liquidity into the whole market."

King concluded, “To deal with rising repossessions, we suggest a Government-backed ‘Prepossession’ scheme. This would consist of the Government working with Lenders to give borrowers on the verge of repossession the chance to pay a more affordable commercial rent, avoiding an unwanted repossession for both the Lender and borrower. Accepting a decreased payment in the short term is more prudent for Lenders, considering the costs associated with repossessing and reselling properties in a falling market. By charging a realistic market rent, Lenders can ride out the downturn and see their asset increase in value while still receiving a regular income."

"As effective owners of the Northern Rock, the Government has a clear opportunity to instigate proactive measures such as this, which would encourage other Lenders to do more to stem the current market crises."

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