One Third Of First Time Buyers Have Been Avoiding Stamp Duty Under Temporary Threshold
Article by Stephen Crompton 11th November 2009
One third of first-time buyers were able to avoid paying Stamp Duty in September as a result of the government's temporary £175,000 nil-rate threshold, according to new data released by the Council of Mortgage Lenders.
There were 6,200 first-time buyer loans for properties between the old threshold of £125,000 and the temporary threshold of £175,000, representing 32% of the 19,700 loans to first-time buyers in September.
Since the concession was introduced last September, an estimated 132,500 house purchase mortgage transactions have escaped paying stamp duty which otherwise would have incurred the tax at 1% - some 27% of the 486,400 house purchase loans in the period.
There were 50,600 loans for house purchase in September - an increase of 2% from August and 43% from September 2008
CML figures show house purchase lending has now increased year-on-year for three consecutive months (following 25 consecutive year-on-year monthly falls) whilst remortgaging has continued its annualised decline, although the rate of decline moderated in September.
There were 33,000 loans for remortgage - a 10% increase from August but 48% lower than September a year ago. Gross mortgage lending was 7% higher than August at £12.9 billion, but was still 25% lower than September last year.
Paul Samter, economist at the CML, says: "The Stamp Duty concession has played a modest role in underpinning confidence in the housing market. As the end date for the stamp duty concession approaches, we may see sustained levels of activity at the lower end of the market in a traditionally quiet time. But the corollary will be lower activity in early 2010 as transactions are "bunched" in 2009."
"Although the recent bounce-back in house purchase activity is holding up, we remain some way below what might be called "normal" levels of transactions."
The temporary £175,000 nil rate threshold is due to end on the 31st December of this year from which date the previous threshold of £125,000 will then apply subject to exemptions.