More than half a million homebuyers would be exempted from stamp duty every year under proposals launched by the Conservative party on 21 April.

If elected, the Tories will raise the stamp duty threshold from £120,000 to £250,000. Party leader Michael Howard said this would particularly benefit first-time buyers and free the average home from the tax.

The Conservatives estimate that the policy, the final instalment of the party’s £4bn of tax cuts, would cost the Treasury £1bn.

However Adam Sampson, director of housing charity Shelter, dubbed the plan “Robin Hood in reverse”. He said: “By increasing the stamp duty threshold, the Conservatives are raiding the public purse to promote private homeownership rather than using the money to increase the supply of affordable housing.”

He also warned that a policy of making houses cheaper by cutting stamp duty could backfire and push house prices higher instead. He said: “Any relief for home buyers is likely to be shortlived because the investment will be swallowed up by house price inflation.”

However Graeme Moran, director of Metropolitan Home Ownership, did not think the policy would overheat the market. He said it could act as a “major stimulus” for first-time buyers, adding: “It might stimulate housebuilders to bring forward the homes they’re developing at the moment.”

At the moment, 1% stamp duty is paid on properties worth between £120,000 and £250,000. The Royal Institution of Chartered Surveyors, like the Liberal Democrats, has asked for the threshold to be raised to £150,000 to help first-time buyers.

Source

Housing Today