Lenders are expressing mixed feelings with the announcement the zero-rate stamp duty tax is to be raised to 120,000.
Abbey chief economist Barry Naisbitt says this is overall a good step in the right direction for first time buyers.
Today the average house price is 172,788, an increase of 169 per cent according to Abbey. More than three qarters of first time buyers pay stamp duty.
Naisbitt says Abbey is disappointed the Chancellor has maintained a ‘slab’ system which will continue to distort the housing market for homes around each stamp duty threshold.
GMAC-RFC says the change does not do enough to help borrowers, especially those in the non-conforming sector. The figure also does not relate to house price inflation over recent years.
GMAC-RFC head of marketing services Jeff Knight says: Any move in stamp duty is a good thing, but I would have liked to have seen a higher level than this. The average house price for non conforming borrowers is still 15 per cent higher than the stamp duty threshold. This places an additional financial burden on such borrowers who are trying to rehabilitate themselves financially. People assume that borrowers who take out a non conforming mortgage will be buying cheaper property but the average house price is only 12,000 less than the UK average.
Naisbitt says: “We would much prefer to see a graduated system introduced. As with income tax, where people only pay higher rates on the income they receive above the marginal allowances, stamp duty should only be charged at higher rates on the amounts above the marginal limits. This would smooth out pricing anomalies and mean a fairer stamp duty system for all homebuyers.”