Stamp Duty Threshold Up To £250,000

From midnight last night the threshold for stamp duty was raised to £250,000 after the change was introduced by Alistair Darling’s pre-election budget.  Whether it was a move to win votes, and an accusation of an idea stolen from the Conservatives is another matter.  The bottom line is that it must surely be a breath of fresh air in a stagnant property market and give hope to countless first time buyers, even if it is not a complete answer to the issues they face.

The recent stamp duty holiday is estimated to have helped 260,000 homebuyers when the cap was at £175,000.  The new permanent raising of the threshold will save the new buyer up to £2,500, which to a first time buyer struggling to raise the required deposit can be a substantial amount and make the difference between being able to buy or not.  The worry would be seeing the sub £200k properties rapidly increasing in value to align with stamp duty which could stifle the market again.

There is a downside to this move for one group of homeowners and that is an increase in stamp duty for properties sold for more than £1 million, which will be introduced in April 2011. The rise will be from 4% to 5%.  It seems likely that the estate agents with a more exclusive range of properties are going to be very busy in the beginning of 2011 with a very quiet second half!

Lifting stamp duty will be a huge help, but looking at the greater picture the main issue facing first time buyers is the price of the property which sets the deposit required by the lender, and lack of real competition when it comes to the mortgage deal.

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