Government suspends stamp duty on homes up to £175,000

Early last week the government announced that it was suspending stamp duty for twelve months on homes up to the value of £175,000. Stamp duty is not applicable on homes up to £125,000 anyway, but the recent move increased the threshold by £50,000 for twelve months in order to try and ease affordability issues for potential buyers. The announcement came after several weeks of speculation with regards to whether any action would be taken over stamp duty.

A few weeks ago the Chancellor, Alistair Darling, indicated that the government was thinking of suspending stamp duty on properties up to a certain value, but with no confirmation of this the housing market took a further hit. This was because some people who had already put in offers on properties decided to back out in the hope that they could save money on stamp duty a few months down the line, and this situation added to the slump in house sales.

Officials are now hoping that the decision to increase the threshold on stamp duty will increase activity within the housing market, which has been very slow over recent months due to affordability problems, falling house prices, and a number of other factors. However, there are concerns about buyers in London, as most will not see any benefit from this action due to the cost of property in this area.

The stamp duty paid on properties between £125,000 and £250,000 is 1% of the property value, and this means that the most buyers will be able to save with this move is £1750 on a property purchased for £175,000. The suspension on stamp duty is set to cost the government an estimated half a billion pounds.