Glimmer of hope for first time buyers

First time buyers struggling to get their foot on the property ladder were given a glimmer of hope on Saturday as the Telegraph predicted an extension on the current tax exemption for house sales under £175,000.

The threshold increase from £125,000 to £175,000 was announced in September 2008 and was intended to last one year. According to statistics from the Council of Mortgage Lenders, 22,000 first-time buyers and 28,100 movers have so far benefited from the increased stamp duty threshold. It is estimated that the extension, which is expected to be announced during Chancellor Alistair Darling’s budget speech on Wednesday, will cost the Treasury approximately £100 million.

Meanwhile, public opinion appears to be in favour of the freeze, with a survey of FindaProperty.com users showing that 37% of home buyers believe the government should suspend stamp duty on all property, while 18% believe that the threshold of the tax should be increased permanently to £250,000.

Lending institutions are also coming out in favour of action of stamp duty, with the Nationwide Building Society this week writing to the Chancellor to recommend an increase in the nil rate threshold to £250,000. The lender also recommends a review of the stamp duty system with a view to bringing stamp duty allowances in line with house price inflation.

Graham Beale, Nationwide’s chief executive, said:

“Nationwide has long called for a reform of stamp duty and we believe increasing the nil rate threshold to £250,000, and linking it to inflation going forward, will stimulate the housing market and help reduce the burden that stamp duty places on first-time buyers in particular. The time is now right for reform, as the current low level of housing market transactions means such changes would have a lesser impact on tax revenues than at the height of the market.”