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Lenders escape stealth tax

The Chancellor&#39s decision not to increase stamp duty on residential property has surprised commentators who believed a hike was in the offing to moderate the booming housing market and generate Government income.
Overall the move has been welcomed and will relieve the Council of Mortgage Lenders which had accused the Government of using it as unfair &#39stealth tax&#39 on homebuyers.
Market analyst John Wriglesworth says a big increase would have “killed the market” while a smaller increase would be no more than a “dirty trick” to raise money.
However Charcol senior technical manager Ray Boulger says he have liked a reform of how it is calculated, rather than the status quo.
He says many borrowers are put-off buying a house even slightly over £250,000 because of the immediate hike in duty to 3 per cent from 1 per cent and argues incremental increases would be fairer.
The Chancellor also announced a clampdown on loopholes used to avoid stamp duty on property transactions which experts believe will hit property investment portfolios.
The reformed regime will include a mandatory tax on deals currently structured to avoid stamp duty. It will also be triggered automatically on all transactions over £10 million.
The move will affect providers offering property funds such as Norwich Union, Standard Life Investments and Threadneedle, by increasing charges incurred in transactions.
Independent mortgage consultant Mark Chilton says: “Before the Budget Scottish Widows set up an Isa investing in property funds. This will be unaffected as the transaction has been done but replicas will be difficult.”

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