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Stamp duty delay wrecks sales
Joe Murphy, Political Editor7 Aug 2008
House sales have begun falling through because of Alistair Darling's hints of a stamp duty "holiday", it was revealed today.
Furious estate agents reported that some buyers have pulled out at the last minute in the hope that they may escape paying thousands of pounds in tax by hanging on.
The industry begged the Chancellor to end the damaging speculation by making an immediate announcement on his plans.
Some agents accused him of ham-fistedly making the stricken property market worse. One branded him "irresponsible".
But despite fears of bigger falls ahead and the risk of a recession, the Bank of England this afternoon held base interest rates at five per cent. It decided that the risks of inflation were too big to cut the cost of borrowing, even though house prices are in freefall and families are being squeezed by higher food and fuel prices.
On Tuesday Mr Darling was asked about a possible plan to scrap temporarily the tax or let buyers postpone paying it for years. The Chancellor refused to confirm or deny it, but said he was considering options to aid the market.
One London homeowner who was due to exchange this morning told the Standard his buyer postponed after hearing Mr Darling's comments. "It is unbelievable that Gordon Brown and Alistair Darling have caused this to happen," said Peter, who did not want his full name published. "My house, an ordinary Victorian terrace in south-west London, was going for £770,000 which meant a stamp duty bill of £30,800.
"I completely sympathise with my buyer who is understandably unhappy about paying that amount if there is a chance of avoiding the tax but it has left me in a real mess.
"The removal agents have been booked, my daughter has a place in her new school and we were all ready to exchange on the house that we are buying. Now everything may have to be cancelled."
New figures from the Halifax showed that homes lost 8.8 per cent of their value last year - the biggest annual fall since December 1992. Richard Hair, an estate agent in Leigh-on-Sea, Essex, said one buyer was considering pulling out of plans to buy a £280,000 house because he could save £8,400 in stamp duty if there was a "holiday".
He said: "We agreed a sale last week. The purchaser came in and said, 'if we have got to pay the stamp duty will they come down another three per cent?'" The vendor is refusing to lower the asking price. Jeremy Leaf, housing market spokesman for the Royal Institute of Chartered Surveyors, said he had heard of two more deals collapsing today. "We would rather Mr Darling said he will or will not do something instead of leaving it open," he said. "Making statements that are unhelpful is taking what confidence there is out of a difficult market."
Peter Bolton King, of the National Association of Estate Agents, said he had been emailed by members furious with Mr Darling, including two from estate agents whose buyers were getting cold feet.
Stamp duty costs the average London homebuyer almost £9,000. It is charged at one per cent on properties between £125,000 and £250,000 and rises to three per cent between £250,000 to £500,000. It then rises to four per cent.
Shadow treasury secretary Philip Hammond said: "Gordon Brown and Alistair Darling should stop playing short-term games with the housing market and start to show the leadership this country needs."
The Treasury said: "Recent news stories suggesting the Government has put forward a firm proposal on stamp duty are simply wrong."
Reader views (5)
This government is hell bent on bringing the housing market and the economy to a standstill!
By leaking the information to get the pulse of people they have virtually brought the housing market to standstill!
Who is now going to go ahead with purchasing till the government clarifies their stand?!
Both Gordon Brown and Alistair Darling are excess luggage on UK's flight to growth and shall be immediately off loaded to allow the flight to take-off!
- Milan Nanavati, Pinner, UK, 07/08/2008 22:05
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Surely, by announcing a tax 'holiday' they are in fact admitting that Stamp Duty is a unnecessary and excessive tax and that like most government levies they are hindering the growth of the economy i.e Petrol Duty.
I've no issue with tax, holes in roads need filling etc but when you see public money wasted in such breathtaking amounts you have to ask the question; if we paid less tax would the government have to be more efficient ?
- Big Andy, London, 07/08/2008 13:31
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Good! The cheaper the house prices, the better!
- Dave, London, 07/08/2008 12:32
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Of course, the obvious solution is to do away with "Stamp Duty" completely.
Alternatively, in the worst case scenario "tax crazy" New Labour could abolish "Stamp Duty" and introduce a "Property Sales Tax" to be paid by the seller when they sell their property. This would obviously only apply to those properties where "Stamp Duty" had not been paid already. This would make buying property easier i.e. no extra funds to "budget for" when buying a property and the "Property Sales Tax" would be funded by the equity in the property at the point of sale. PRESTO . . . Job Done!
- Fraser, Telford Park, 07/08/2008 12:09
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Presumably ALL those who have already paid their "stamp Duty" will be given a "loan-back" facility by the government otherwise this will be an unfair government policy exclusively favouring a very small element of total home-owners, right?
Presumably, this type of favouritism would NOT be permitted in even our UK Courts far less the "higher authority" of the European Courts?
- Fraser, Telford Park, 07/08/2008 12:02
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