Chancellor announces end of stamp duty concession
In a move that could cause sales of first-time buyer properties to rise sharply early next year, the current exemption on stamp duty will not be extended as hoped.
In his Autumn Statement yesterday, the Chancellor said that this concession has proved ineffective in increasing the number of first time buyers entering the market, therefore people buying their first home will no longer receive an exemption from stamp duty from 24 March 2012.
From this date, first-time buyers will have to pay 1% stamp duty on properties costing between £125,000 and £250,000, along with people who are already on the property ladder.
New figures from the Office for Budget Responsibility (OBR) suggest that there will only be marginal growth in the UK housing market over the next two years.
It is expected to grow from £6 billion in 2010-11 to £6.4 billion in 2012-13.
The rate of growth is then expected to accelerate to £7.5bn in 2013-14 and £11.4 billion in 2016-17.
Earlier this week the Council of Mortgage Lenders warned that ending the stamp duty exemption could destabilise the already fragile housing market.
It argued that reinstating the fee for first-time buyers would only generate a small increase in tax revenues as properties under £250,000 represent just 13 per cent of property sales.
The Chancellor did offer some help to first-time buyers in the Autumn Statement, confirming that a new mortgage indemnity scheme will be introduced to help prospective purchasers who are only able to raise a small deposit.
He also announced that the right-to-buy scheme, which was introduced in the 1980s, will be invigorated, with social housing tenants being offered a discount of up to 50% to help them buy their local authority properties.
Mr Osborne said that the scheme, which he called “one of the greatest social policies of all time”, had suffered under previous governments.