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End of Stamp Duty holiday unlikely to boost market

The end of the Stamp Duty holiday for first-time buyers in March 2012 is unlikely to result in a significant surge in transactions, according to Capital Economics.

Since March 2010, first-time buyers have been exempt from paying the 1% Stamp Duty on properties worth less than £250,000, but from March 25 2012 all buyers will pay Stamp Duty on properties worth more than £125,000.

Capital Economics says that past experience suggests housing transactions can increase by between 20% and 40% in the final months of a Stamp Duty holiday, but in this case any uptick in activity is expected to be more modest.

It says this is because the exemption applies only to first-time buyers rather than all consumers, and also because of the worsening economic outlook.

It says the 1991/92 Stamp Duty holiday and the 2008/09 holiday – both of which caused a surge in transactions – came at a time when the economy was emerging from recession, compared to today’s fears that we are currently facing one.

Capital Economics adds: “Of course, with the market still in the doldrums, it is perfectly possible that the Stamp Duty holiday is extended. But while the market remains overvalued, the chances that a Stamp Duty holiday will provide a kick-start for transactions, or even a material short-term boost, seem remote.”


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  • Richard 27th September 2011 at 4:58 pm

    It will make absolutely no difference. If they were serious about this sort of incentive, they would suspend ALL Stamp Duty Land Tax on ALL residential transactions for 12 months. That would really be a kickstart. In many areas there is a touch of realism entering sellers’ expectations & the next year is on a knife edge without a major incentive.