Page last updated at 15:48 GMT, Tuesday, 5 August 2008 16:48 UK

Will there be a stamp duty break?

By David Thompson
BBC News political correspondent

Rooftops
Not everyone wants property prices to start rising again

Will stamp duty be scrapped, albeit temporarily, in order to breathe new life into the housing market?

Truth is, I don't know.

Perhaps more worryingly, it does not appear, at least on first sight, that the Treasury knows either.

First there were authoritative reports, apparently coming straight out of Downing Street, that there would be a holiday from the tax.

Then the BBC learned from Treasury sources that, rather than a holiday, the government was considering deferring stamp duty - a buy-now-pay-later scheme.

And, then, the man who should know, Chancellor Alistair Darling, came down firmly on the fence and said he was considering "a range of options".

So, if you are about to buy a house or a flat and are wondering whether to leave it a few months in the hope you might avoid the stamp duty, good luck!

Any good?

To be fair, what is happening is that, faced with the certain knowledge that "something must be done" about the current economic slowdown, Treasury officials are sitting, possibly with wet towels wrapped round their heads, feverishly trying to work up a plan their political masters can present to a grateful nation in the coming months - showing how they will guide us through the credit crunch, the housing slump and the general financial gloom.

So, would a holiday from, or deferral of, stamp duty actually do any good?

Well, it depends who you talk to.

The tax is levied at 1% on properties worth between 125,000 and 250,000, rising to 4% on homes valued at more than 500,000.

It rakes in about 6.5bn a year for the Treasury.

Organisations like the House Builders' Federation have called for a stamp duty holiday, and sooner rather than later.

Major years

The Conservatives have suggested removing it from most first-time buyers in the past and believe the government should do it now.

In fact, the Tories have form on this. Stamp duty was suspended by the Major government shortly before the 1992 election, in order to address a housing slump then.

Asked about this on Tuesday, John Maples, a Treasury minister at the time, said he thought it was an interesting idea in the present climate but questioned how much difference it had made then and whether it would work now.

Some economists have also queried the wisdom of such a move - and wondered out loud whether the government could afford to do it.

First-timers' hopes

But perhaps the best judges of this idea are those at the sharp end - the people who are actually trying to buy and sell homes.

A lot of first-time buyers would throw up their hands in horror at any measure designed to revive the housing market. What they want are further falls in prices so they can get on the first rung of the ladder.

Then there is the point that, when people are having to find tens of thousands of pounds for a deposit on a property, the idea that knocking off a couple of grand in tax is going to make much difference might be slightly optimistic.

There is no doubt both the Treasury and Number 10 are painfully aware that the public and their own ministerial colleagues are expecting a series of Big Ideas in the autumn.

It might be a little unfair to expect the fully formed answers now, but they will be asked to show their workings soon.


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