A postage-stamp sized duty holiday (updated)

So at 9.06am the Treasury issued a press release (71 words ) confirming what yesterday they were suggesting wouldn't happen - a temporary stamp duty holiday.

The move - first leaked to the Sun almost a month ago - is much smaller than some had expected, however. Homes between £125,000 and £175,000 will be exempted from the 1 per cent tax for a year starting tomorrow.

Notice, however, how the press release (currently not online) doesn't contain a costing. Apparently the estimated hit to the exchequer for 2007-08 is £600 million*

To put this in context, the Treasury Red Book, with its annual spending projections, puts the receipts from Stamp Duty at £13.4 billion in 2006-07, £14.3 billion in 2007-08 and £13.5 billion in 2008-09. This means the value is less than a twentieth of the revenue raised by the tax.

Enough to save Gordon's skin?

*How will it be paid for? At the morning lobby briefing, the Prime Minister's spokesman did not say where the money would come from, insisting that this would be announced at the time of the Pre-Budget Report alongside other tax changes. However the Treasury say "most of the money is a reconfiguration of money we have alloacted for housing."

Comments

[Louis]

Why not scrap stamp duty altogether to revive housing market!!

[Katie]

Even given the recent falls in house prices Where are the houses that cost less than £175K???

If the goverment were a board of directors of a business, then the shareholders would fire them!

They need to make radical changes if not only temporary. Lets try keeping property upto 175k free of stamp duty, 1% for property 176k-400k, 2% 401k-599k and 3% above 600k

[eddie reader]

Fortunately, this will have little effect on house purchases as those wishing to obtain a mortgage will need to provide a substantial deposit. Houses are still substantially over-valued.
A biiger (totally unaddressed - and unaddressable ?) problem is that whereas a fall in the dollar did have a positive effect on US manufacturing a fall in sterling hasn't.
The UK has continuing severe long-term economic problems that no amount of fiddling with the fundamentally irrelevant housing market will solve.

[michael, islington]

It would help if you bothered to read information put out by the government through Communities and Local Government.

More specifically, its changed the qualifying period for interest to be paid on mortgages for those on benefits from 39 weeks to 11 weeks.

Any difference? Not in the big scheme of things. The market is 40% overvalued. Prices have got to fall. People have got to be hurt.

[Peter]

"If the goverment were a board of directors of a business, then the shareholders would fire them!"

Problem with having an AGM only every five years you can't get rid of a bunch of underperformers and non entities.

Today's measures are small beer and do not affect the majority of the electorate. More damage will be done by the continuation of the VED policy and the removal of the 2.7bn Tax Bribe in the pre budget report as it trys to sort out its finances

[mike]

Govt. intervention in financial markets rarely. if ever? works.
This an attempt by Brown and co to paper over the cracks to give them some chance at elections in 2 yrs.
As with past performances with these clowns they will hurt far more by supporting over pricing of boxes than letting prices fall

[Amelia Bedales]

Are they actually trying to speed the crash? All this will do is ensure that homes with prices between 176k and 200k now have to be reduced to 175k or under or they won't sell. Please remind me of the average UK house price - wasn't it around 190k? In any case, why risk buying now to save a paltry percent when waiting will bring you the same saving in two months or so, given the current pace of price decline

[Simon]

"If the goverment were a board of directors of a business, then the shareholders would fire them!"

Perhaps, but they would also be given a big bonus, a couple of million pounds golden farewell, and a pension of a few hundred thousand, whilst keeping their non-exec directorships. Businesses are as much to blame for this economic train crash as are the government and greedy citizens.

[Andrew]

This still doesn't solve the problem that houses in Britain are still far, far too expensive.

[Ian]

This is about headlines not about the economy.

[joan tompson]

Not that up on things but hoping to buy a house!! are they stupid! why £125/175000 are they in touch with reality and 1% well fuel/food/reality!! well the cost of living is so high and fuel they need to rethink quick!! people out there need sound policies that enhance life not silly jestures that neither benefit seller/buyer let alone help the housing market!! get real we have to every day

[John]

In reply to Katie " Where are all the houses costing less than £175k".

Katie come to Liverpool - plenty of good quality houses and despite what some right wing think tanks are saying - regeneration is alive and well.

[Reg]

And of what use is this move! It's only touching the lower end of the market where people are already under stress, lowering incomes and potential job losses. Foir those that can buy all they have to do is wait a few months and the prices will drop even further, a totally pointless move, 3% is a drop in the ocean when prices are falling at the curent rate and may well see a total of 305+ wiped off values..

[your right move]

Is the UK Economy Heading for a Massive Recession? Interesting article on Your Right Move site - http://blog.yourrightmove.co.uk/2008/09/is-uk-economy-heading-for-massive.html

UK Prime Minister Gordon Brown suspended a homebuyer tax and proposed spending 1 billion pounds sooner than planned to help reverse Britain's worst housing slump in at least 18 years.

[Mark Johnson]

"In reply to Katie " Where are all the houses costing less than £175k".

Katie come to Liverpool - plenty of good quality houses and despite what some right wing think tanks are saying - regeneration is alive and well."

John - Sticking a few wardrobes in an empty warehouse does not qualify as regeneration. Go to Manchester and try and buy a family home for £175k, or anywhere south of Bedford.

The two outcomes of this farce, sorry three, is that;

1 - Almost all property currently on the market, valued between £176k and £215k, is going to nose-dive below that £175k threshold because agents know those properties won't shift otherwise.

2 - Banks, because of their current lending policies, are going to refuse significant numbers of mortgage applications, adversely affecting thousands of peoples credit ratings.

3 - In about six months, around budget time, the chancellor will resign / be sacked / shuffled and we will have a new chancellor, promising divine intervention but delivering equally useless, and flawed, ideas and policy.

Mr Brown. If you think that Great Britain believes that you are the man to lead us through this current economic disaster - most of which (we realise) is as a consequence as your time as chancellor (we haven't forgotten yet!), then ask us? Put your trust in us, in the same way that you ask us to put our trust in you.

[Chuck Unsworth]

Blears' performance on BBC1 this morning was dire. Equally the useless interviewing did nothing to shed any real light.

One thing Blears did let slip was that the money was due to be spent in two or three years time 'anyway' so is being 'brought forward'.

So, our money, 'brought forward'? Does this amount to yet more borrowing of our taxes to spend on crackpot elastoplast schemes?

[Ann Smith]

reeneration in liverpool? is that the scheme where the government compulsorily purchased homes for a pittance, throwing out the elderly residents - who could not afford to buy elsewhere, then did the houses up and sold them for 3 times the price paid under compulsory purchase...

there will be a time when the government and housing associations will own most of the homes in Britain, then watch out, because we will likely be paying as much in rent then as we do in mortgages now.

[Nabil H]

This stamp duty concession is a joke!
For a party that says it supports hard working families, right...
where is a house worth between £125000 and £175000 in London?
Come on! Don't treat people like fools, Alistair, Gordon!