Stamp duty relief will bring
little help to the South East
is a clear North-South divide with respect to the
twelve-month suspension of stamp duty
Rumours of a change to the stamp-duty regime
enraged agents when they were leaked last month.
Such relief from the dread tax was exactly the
sort of market assistance that they hoped would
come from the Government - but the promise of tax
savings at some future time caused some of the few
active buyers to abort deals. The announcement of
a suspension of stamp duty on all homes priced
under £175,000 may not be as generous as hoped -
but has quickly removed the damaging uncertainty.
Research from Halifax, the lender, indicates
that 230,000 homebuyers in England and Wales would
have been spared stamp duty if the temporary
higher threshold had been in place last year.
Sadly, fewer buyers will be likely to benefit over
the course of the 12-month holiday because of the
sharp decline in property sales, particulary in
the lower prices ranges, which has suffered from
the lack of first-time buyers. The average
first-timer, Halifax reports, pays an average £144,283
for a home on which he or she would be saved an
average £1,443 in stamp duty.
The change will bring temporarily the exemption
from stamp duty in line with the current average
house price - which the latest Land Registry
figures show to be £178,364 - but many buyers in
London, the South East, South West and East of
England will not feel the benefit. The average
cost of a home in these areas far exceeds the
Government's £175,000 cut-off: in Greater London
the average home costs £348,366.
The significant regional differences are confirmed by
research carried out by Hometrack, the property data
company, for Bricks & Mortar this week and are shown on
the table and map, right. Larger areas benefiting most from
the new rules will be the North East, Yorkshire and
Humberside, and the North West, where 70 per cent of
transactions are for homes valued at less than £175,000 - a
marked improvement on the previous tax ceiling, which helped
only about 50 per cent of buyers in those areas.
Hometrack's analysis of transactions by postcode confirms
the North-South divide. Homebuyers in parts of Middlesbrough,
Liverpool and Birmingham will welcome the change because in
some parts 100 per cent of all housing sales last year fell
below the new stamp-duty threshold. Smaller areas of Hull,
Manchester and Sheffield are close on their heels.In stark
contrast, parts of southwest London will be almost
unaffected. In Chelsea and Earls Court fewer than 0.2 per
cent of sales are affected by the stamp-duty holiday.
The suspension will reduce transaction costs for a small
minority, by up to £1,750. Ray Boulger, of John Charcol,
the mortgage adviser, believes it is not the answer. “The
issue lies more with mortgage lenders and their
'shut-up-shop' attitude to lending above certain
loan-to-value mortgages,” he explains. Until the
Government addresses this there will be only a trickle of
new buyers entering the market.