Stamp duty holiday falls well short of government forecasts
Stamp duty relief for buyers falls £428 million short of government forecast
Only 115,000 home buyers benefit from the stamp duty holiday in first year
Government stamp duty tax revenues down over 70% compared to 2006/07
Stamp duty holiday has little impact in London but Basildon tops saver list
The stamp duty holiday implemented last September, at the height of the property downturn, has helped only 115,447 UK home buyers in its first year - less than a quarter of the number predicted by the government to benefit, according to leading property website Zoopla.co.uk.
Between 2 September 2008 (when the holiday took effect) and 1 September 2009, the tax relief saved property buyers only £173 million, compared to the £600 million forecast by the government. The extension of the holiday to the end of 2009 will also provide only limited relief with an additional 37,500 buyers expected to benefit in the last four months of 2009, saving a further £61 million.
And whilst the impact of the tax holiday to buyers has been far lower than expected, the Treasury has been hit hard by the record low property transaction levels, barely scraping in £2 billion from stamp duty in the 2009/10 tax year compared to almost £6.5 billion in 2006/07.
Property buyers in London have benefited least from the stamp duty holiday, where typical house values (£374,284) are almost double the national average. Only 13% of transactions in the capital were eligible for the tax relief (£125,000-£175,000 price bracket) between September 2008 and September 2009, far lower than any other region, and saving buyers just £9.4 million. But certain areas within commuting distance of London still offer the opportunity to take advantage of the stamp duty holiday before it expires at the end of the year. Basildon tops the list of places where buyers have benefited over the past year with 58% of purchases in the stamp-free price bracket.
Nick Leeming, Commercial Director, Zoopla.co.uk, said: "The stamp duty holiday has so far failed to reinvigorate the housing market in the way that the government predicted, with limited relief for first-time buyers particularly in the South East. With the government's plummeting stamp duty revenues, the golden goose of stamp duty now seems somewhat of a dead duck. Rather than ending the stamp duty holiday, the government should seriously consider extending it by making first time buyers permanently exempt and by giving others the ability to defer payment for up to say five years."
Top 5 areas where buyers have benefited from stamp duty holiday
Area | Average property value (Nov 09)* | % of sales benefiting from stamp duty holiday (Sep 08 - Sep 09) |
|---|---|---|
£132,022 | 58.4% | |
£158,030 | 57.4% | |
£183,702 | 55.7% | |
£147,139 | 55.1% | |
£142,751 | 53.8% |
* Source: Zoopla.co.uk
Stamp duty holiday beneficiaries by region
Region | Average property value (Nov 09)* | % of sales benefiting from stamp duty holiday (Sep 08 - Sep 09) |
|---|---|---|
£209,332 | 30.7% | |
£218,616 | 28.9% | |
£169,140 | 27.0% | |
£156,526 | 26.4% | |
£149,413 | 24.8% | |
£139,888 | 24.5% | |
£258,647 | 24.4% | |
£152,356 | 23.5% | |
£153,834 | 21.4% | |
£157,070 | 19.6% | |
£374,284 | 12.8% |
* Source: Zoopla.co.uk
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About the stamp duty holiday
The stamp duty holiday came into effect on 2 September 2008, temporarily making house purchases between £125,000 and £175,000 exempt from the lowest stamp duty tax rate of 1% (the previous starting level for the tax was £125,000). Properties purchased between £175,000 and £250,000 must pay 1% stamp tax, while 3% is applied to homes costing between £250,000 and £500,000. The higher stamp tax rate of 4% is charged on purchases over £500,000.
The average saving made by those buyers able to take advantage of the stamp duty holiday is £1,498 nationally . virtually the mid-point of the £125,000-£175,000 price bracket.
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