Comments : Could axing Stamp Duty help the property market to recover?
The Government introduced a Stamp Duty holiday in 2010 which meant that properties worth £250,000 and under would be exempt from paying Stamp Duty Tax. This was aimed to help first time buyers onto the property ladder because £250,000 is considered the highest price a first time buyer would pay for a home.
However, since the Stamp Duty holiday ended in March 2012, property sales have taken a dramatic dive with only 57,000 transactions taking place in June. This is the second lowest figure since 1995.
Stamp Duty Tax is calculated depending on the sale price and can add a significant cost to the already expensive conveyancing process. The current rate for Stamp Duty for properties valued between £125,000 to £250,000 is 1% which can be a major burden for most first time buyers, who have already struggled to secure a mortgage deposit.
Properties worth between £250,000 and £500,000 are charged 3% Stamp Duty which rockets from costing £2,500 to £7,500. This tax affects many families that are looking for larger properties. From £500,000 to £1,000,000 Stamp Duty is charged at a rate of 4%, properties worth £1 million to £2 million will have to pay 5% Stamp Duty and properties worth more than £2,000,000 will have to pay a huge 7% Stamp Duty Tax.
But will axing Stamp Duty actually make a difference to the recovery of the property market? The UK’s largest estate agent Countrywide, seems to believe so and have urged the Government to ‘review the outdated thresholds.’ Countrywide’s statement has been echoed across the country by other estate agents who think Stamp Duty is a burden and the property market will make a faster recovery without it.
Home ownership is a pipe dream for many UK renters with 42% of them admitting they can not afford to save for a deposit. Most mortgage lenders require a 20% deposit and with the average house price at £165,738 it means you need a deposit of more than £33,000.
Do you agree with the UK's estate agents and believe that Stamp Duty Tax is holding back the recovery of the housing market and do you think the Government will heed Countrywide's advice and scrap it?
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