Alistair Darling’s helping hand for first-time buyers will not itself be a panacea for a struggling housing market, a West Midland building society boss said.
In his last Budget before the General Election, the chancellor announced that the stamp duty threshold on house sales would double from £125,000 to £250,000 with immediate effect.
The tax holiday, which will run until the end of 2011, will be financed by a rise of one percentage point - from four to five per cent - in stamp duty on homes costing more than £1 million. That’s a rise of 25 per cent.
It means that nine in ten first-time buyers will escape the stamp duty net, Mr Darling claimed.
Although the announcement was widely welcomed by property professionals, West Bromwich Building Society group finance director Jonathan Westhoff warned that by itself it would not result in an immediate surge in sales.
“It is good news because it attracts the first-time buyer buyer element, which in terms of the recovery of the market is fundamental.
“But it is not a single driver of recovery. More fundamental factors such as job security will include decision-making,” Mr Westhoff said.
It was a view echoed by Harvey Williams, West Midland spokesman for RICS, the chartered surveyors’ body.
First-time buyers are the “life blood” of the housing market and anything that persuades more of them to get on the ladder is welcome, Mr Williams said.
Despite the relief offered them, RICS would continue to press for a wholesale reform of stamp duty.
The organisation wants an end to the “slab” system under which a £1 rise in the price of the house can trigger a big increase in tax to a marginal system along the lines of income tax, Mr Williams added.
Simon Dicken, a residential property expert at Jones Lang LaSalle in Birmingham, said raising the stamp duty threshold was positive news that would give “a much needed” stimulus to the market.
But he warned that underlying economic circumstances and worries that interest rates could rise later this year “will continue to weigh on the market”.
Peter Bolton King, chief executive of the Warwick-based National Association of Estate Agents, called stamp duty a “tax on aspiration” adding: “For thousands of first-time buyers the dream of getting on to the property ladder was slipping out of reach.
“This announcement has added a new rung to the property ladder, one within reach of thousands of young families.”