Housing plan fails to bolster recovery hopes

The government’s plans to revive the housing market by issuing a stamp duty holiday will not help first-time buyers in the capital and the south east, advisers said as they questioned the detail of the policy.

Chancellor Alistair Darling has announced a suspension on stamp duty for sales of residential property worth up to £175,000, with an estimated loss in taxes over the 12-month period of £600m.

According to Chas Roy Chowdhury, head of taxation at the Association of Chartered Certified Accountants, the real issue lies in the cap placed on purchases eligible for the holiday.

‘I question why it chose £175,000. In metropolitan areas, how many houses are there at that price?’ he said.

Roy Chowdhury said a £250,000 cap would enable more people who wouldn’t otherwise be able to obtain finance to take advantage of the suspension.

‘I’m not sure why it chose this figure ­ we wanted a broader thrust. A more holistic approach was needed,’ he said.

Mike Warburton, senior tax partner at Grant Thornton, said the £175,000 purchase cap will capture the majority of first homebuyers: ‘Possibly not in London, but apart from the major city centres, it won’t be a problem. In the south east it won’t help much. That’s the problem with stamp duty: it’s not phased regionally,’ he said.