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First time buyers ‘stamping’ for joy over tax savings

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According to data released by the Council of Mortgage Lenders, one third of first-time buyers escaped paying stamp duty in September.

‘Stamp Duty Land Tax’ (SDLT) is the tax you pay when you buy property. New thresholds introduced from 3rd September 2008 mean that if you buy property for less than £175,000 you don’t pay any stamp duty at all.

There were 6,200 first-time buyer loans for properties between the old threshold of £125,000 and the temporary threshold of £175,000 in September, representing 32% of the 19,700 loans to first-time buyers that month. There were also 7,300 home mover loans for properties between £125,000 and £175,000 which was 24% of the 31,000 loans to home movers in September.

Since the concession was introduced last September, in a government effort to ease the crisis in the housing market, an estimated 132,500 house purchase mortgage transactions have escaped paying stamp duty. Buyers would normally have incurred the tax at 1%.

CML economist Paul Samter said:

“The stamp duty concession has played a modest role in underpinning confidence in the housing market. As the end date for the stamp duty concession approaches, we may see sustained levels of activity at the lower end of the market in a traditionally quiet time. But the corollary will be lower activity in early 2010 as transactions are “bunched” in 2009.

“Although the recent bounce-back in house purchase activity is holding up, we remain some way below what might be called “normal” levels of transactions.”

But whilst lending criteria remains extremely strict there have been further signs that the housing market is making the first signs of a very slow recovery, with 50,600 loan applications made for house purchases in September – an increase of 2% from August and 43% from September 2008.

House purchase lending has now increased year-on-year for three consecutive months (following 25 consecutive year-on-year monthly falls) whilst remortgaging has continued to decrease, although the rate of decline stablised0in September.

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Written by Andrew Hodges

November 16, 2009 at 9:41 pm

Posted in Comment, LinkedIn

Tagged with , ,

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