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AS 2011: Govt brands mortgage stamp duty holiday a failure

The Government has declined to extend the stamp duty holiday for first-time buyers as it claims the policy has failed to increase the number of first-time buyers entering the market.

In Chancellor George Osborne’s autumn statement today, he failed to extend the stamp duty holiday beyond its end date of March 2012, despite calls to do so from industry bodies such as the Council of Mortgage Lenders.

In the 2010 budget, then Chancellor Alistair Darling announced the stamp duty threshold would double from £125,000 to £250,000 for first-time buyers but announced an increase in the rate for properties worth more than £1m from 4 per cent to 5 per cent. The stamp duty holiday is due to end on March 25, 2012.

The autumn statement says: “The government is publishing analysis showing that the stamp duty land tax relief for first-time buyers has been ineffective in increasing the number of first-time buyers entering the market.

“This relief will therefore end on March 24 2012 as planned. The government is instead prioritising more effective measures which provide better value for money as set out above and in its housing strategy.”

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Comments

There are 6 comments at the moment, we would love to hear your opinion too.

  1. Disappointing news from the Chancellor , but hardly surprising. I would have thought that having sufficient deposit is a bigger stimulus to purchasers entering the market rather than a possible Stamp Duty saving.

    This has certainly been my experience working in the mortgage market (since the mid 1970’s) and it seems a bit naive to think otherwise.

  2. no no no its not the stamp duty holiday that is the failure but the banks lack of lending, how thick some people really are, the time to continue lending at 90-95% was in 2008/09/10 that would have supported house prices and the economy

  3. Bring back MIRAS for first time buyers and change stamp duty so pay additional interest on the tiered bit, not all of it.
    The current stamp duty causes property price changes as people won’t pay an extra £5k in stamp duty due to paying £251k versus £250k for a property…

  4. JWK – you are oh so right. It’s not the stamp duty holiday that’s the failure it’s the banks/ building society’s who are not lending to first time buyers.
    The solution would have been to provide FTB with a 95% loan that the government indemnifies to the lender. Simple.
    Politicians are a waste of space!!

  5. Is Osborne on this planet? Is he in our world? come to think are any of them in our world….!
    The banks are to blame for the wealth destruction that everyone of us is experiencing.

  6. As someone who has been active in the mortgage market for decades it astounds me how and why politicians can come up with stupid and complex solutions to a simple problem…… The stamp duty holiday was always doomed to fail and the govt scheme announced to indemnify FTB mortgages at 95% is another pointless waste of space time and money…

    Lenders claim that they dont like 95% loans because FTBs cant afford the loans so they dont lend – This is Bollocks – pardon my french!!

    The Banks lent irresponsibly at all levels of LTV particularly 75% Self Cert in the old days so LTV is not the panacea it seemed then or now.

    My solution – simplicity itself is for the GOVT to force the banks they and we own to sensibly underwrite affordabilty – so if someone can afford to repay say 120000 loan they can do so at 95% as they can 75% ltv (the risk is in the house price falling … not affordabilty!!.

    Then they should make the banks lend at 95% at a sensible rate say bank + 3.5% giving an affordable and profitable rate to the lenders of 4%.

    If they cant make a profit at 4% with savings rates through the floor then they want shooting anyway.

    If they did this no need for complicated rules expensive rates etc FTB mortgages would be affordable lent to people who could afford the loan repayments and would get the market moving with minimal input SIMPLES……

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