Many people give at least some of the credit for the UK property revival to the Government’s decision to lower the stamp duty threshold from £175 000 to £125 000 but this stamp duty holiday is about to come to an end and it could spell disaster.
Surveys carried out by leading mortgage lenders seem to indicate that the end of this arrangement could well see tens of thousands of sales fall through.
Many experts are criticising the Government on this one as they believe that they have missed a golden opportunity to reform this tax. The stamp duty tax is seen as distorting the property market because of the huge increase from 1% to 4% on properties in the £125 000 to £500 000 bracket. Experts also believe that the tax should only be applied to the excess rather than to the whole purchase price.
This planned reversion to the old level of stamp duty is causing deep concern in the property industry. James Thomas, head of residential investment at property consultants Jones Lang LaSalle, has expressed a worry that this move could cause drops in property prices across the board.
‘There are already signs of the recent resurgence in house price growth slowing and our latest Residential Market Forecast anticipates a fall in average UK house prices of around 7% in 2010,’ he explained.
As usual, however, this kind of news could prove to be a double edged sword. Buy to let buyers may well benefit from the knock on effect of a rise in tenant demand.
