Calls to abolish stamp duty intensify

The government is under increasing pressure to abolish stamp duty to try and bolster the housing market.

However, many experts in the industry say that the measure will have little impact, as it fails to address the real problems facing the market.

The temporary increase in the stamp duty threshold introduced on Wednesday means that anyone buying a home worth up to £175,000 will be exempt from the 1% tax. This means around half of all UK properties will be free of stamp duty.

While this will help some people, expert consensus is that more needs to be done to improve mortgage availability. Ray Boulger of mortgage advisors John Charcol said: “A suspension of one year on stamp duty…is absolutely not the answer to the problem.

“Yes it will help a small minority of people, but the issue lies more with mortgage lenders and their ‘shut up shop’ attitude to lending above certain loan-to-values. The government needs to address this situation above all.”

According to John Postlethwaite, a consultant at Punter Southall Financial Services, the government would have to abolish stamp duty to see real impact on the housing market. A complete suspension would cost less than £2 billion a year.

John Postlethwaite said: “Transactions are lower not just because there are less first-time buyers, but because people at all levels aren’t buying.

“Second and third-time buyers would arguably benefit from a stamp duty exemption as they can access the cheaper finance that first-time buyers are unable to get at the moment.”

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