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Duty change could be hard to monitor

DAVID FINLAY,INTERMEDIARY BUSINESS DIRECTOR, BARCLAYS
DAVID FINLAY,INTERMEDIARY BUSINESS DIRECTOR, BARCLAYS

The Budget has dominated the news agenda in recent weeks and as usual the custodian of the battered red briefcase has managed to combine a couple of small pats on the back with a far greater number of howls of derision.

When looking at the impact on the mortgage market there is one obvious headline-grabbing issue to assess – the starting threshold for Stamp Duty will be raised from £125,000 to £250,000 for first-time buyers. To compensate, the levy for properties over £1m will be 5%.

The Council of Mortgage Lenders has estimated that around 92% of first-time buyers would have been exempt from paying Stamp Duty last year had the threshold been raised to £250,000 earlier. It calculates that some 69% of home movers would also have been exempt in 2009.

So while this move should be seen as a positive is it too little too late and just pre-election window dressing?

There have been warnings from top lawyers and accountants that the new scheme could be hard to police and open to fraud.

Stamp Duty is paid by a buyer’s solicitor on their behalf and the buyer has to sign a form confirming all details are correct.

The new form will contain a box asking whether the purchaser is entitled to Stamp Duty relief but does not ask for evidence of this.

It will be interesting to see how this is policed, and it’s this sort of question that ensures the issue of Stamp Duty will remain in the spotlight for some time to come.

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