Page last updated at 14:37 GMT, Thursday, 7 August 2008 15:37 UK

Options 'kept open' on stamp duty

Rooftops
Stamp duty raised 6.5bn for the government last year

Suggestions that the government has put forward a proposal to let homebuyers delay stamp duty payments are "simply wrong", the Treasury has said.

On Tuesday, Chancellor Alistair Darling failed to rule out changing the tax in order to free up the housing market.

The Tories accused him of playing "short-term games", while estate agents warned of greater "uncertainty".

But the Treasury has said the story was "speculation" and insisted a "number of options" were being looked at.

Currently, people buying properties for between 125,000 and 250,000 pay 1% in stamp duty at the time of sale.

Those spending more than 250,000 pay 3%, while homes worth more than 500,000 incur a 4% rate.

'Incentive'

On Tuesday, Mr Darling refused to be drawn on newspaper reports that stamp duty was to be temporarily scrapped, as part of an economic recovery package being put together by the prime minister.

He told the BBC he was "looking at a number of measures" and had not "concluded exactly what we need to do".

Although we have called for a stamp duty holiday, I wish he hadn't said it
Peter Bolton King
National Association of Estate Agents

A day later, the shadow Treasury spokesman, Philip Hammond, said floating a stamp duty suspension without confirming it one way or the other had "created a significant incentive for people to delay the purchase of a property in the hope of avoiding the payment of stamp duty on the transaction".

"The uncertainty can only undermine the market further, reducing the volume of transactions when they are already at historic lows," he said.

"Indeed, we now have the worst of both worlds - a potential delay in property transactions, but with no definite proposal on the table."

'Delicate market'

Peter Bolton King, chief executive of the National Association of Estate Agents, said uncertainty over a possible "tax holiday" could hit sales, as buyers put off completing in a bid to avoid the charge.

He added: "This uncertainty is a very, very dangerous thing - just to make a comment without backing it up in what is a very delicate market.

"Although we have called for a stamp duty holiday, I wish he hadn't said it."

But in a statement, the Treasury said: "Recent news stories suggesting the government has put forward a proposal on stamp duty are simply wrong. These stories are based on speculation.

"As has been said on many previous occasions, the government has made clear that there are a number of options we will need to consider to help businesses and people get through what is undoubtedly a difficult time."

The Conservatives temporarily suspended the tax on homes worth less than 250,000 during the 1991 recession.


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