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Alistair Darling was resisting calls last night to make an announcement on
stamp duty despite evidence that homebuyers are delaying purchases because
of the uncertainty surrounding the tax.
Estate agents reported that buyers were pulling out of purchases and
cancelling viewings in the hope that they would avoid paying the tax if they
waited until later in the year.
The Chancellor withdrew from an interview linked to the subject last night,
two days after refusing to rule out that he planned to suspend stamp duty
temporarily in an attempt to stimulate the housing market.
Mr Darling had said that he was considering a number of measures to “help
people with housing”. His remarks provoked widespread speculation that the
measure would be introduced this autumn.
The Treasury last night described as “simply wrong” claims that the Government
had put forward a proposal on stamp duty. “These stories are based on
speculation. As we have consistently said, there are a number of options we
will need to consider to help businesses and people through what is
undoubtedly a difficult time,” it said in a statement.
Richard Hair, an estate agent in Leigh-on-Sea, Essex, said that he had closed
the sale of a house on Monday for £280,000, but after the Chancellor’s
comments the buyer said that he was considering pulling out because he might
save on the stamp duty of £8,400. “The purchaser rang and asked to have an
extra 3 per cent off the price because he was going to have to pay stamp
duty, which he might not have to pay later.” The vendor was refusing to
lower the price, Mr Hair said, and the deal could fall through.
Doug Sleaper, of Townends, said that a buyer in the agent’s branch in Staines,
Surrey, was ready to make an offer on a £765,000 property but had decided to
hold back until October because he might save £35,000 in stamp duty. Five
people had suspended their searches at the agent’s office in Brook Green,
West London, as a direct result of the uncertainty.
Mr Sleaper said that even though it was explained to potential buyers that any
changes to stamp duty would be unlikely to benefit transactions at the
high-end of the market, purchasers were still deciding to wait.
Peter Bolton-King, head of the National Association of Estate Agents, said
that Mr Darling needed to clarify his intentions urgently. “If the
Government is serious about doing something to help this situation we need
them to actually come out and say what it is they’re going to do,” he said.
Philip Hammond, Shadow Chief Secretary to the Treasury, said: “The last thing
we need is a government that is making things worse by deliberately creating
uncertainty over stamp duty. Gordon Brown and Alistair Darling should stop
playing short-term games with the housing market and start to show the
leadership this country needs.” The Tories have said that they would lift
the threshold permanently for first-time buyers to £250,000.
Stamp duty is levied at 1 per cent for houses from £125,001 to £250,000, 3 per
cent for £250,001 to £500,000 and 4 per cent above that. It will be
difficult for Mr Darling to cancel stamp duty, not least because it
contributes £6.5 billion a year to public finances.
The Chancellor has commissioned Sir James Crosby, the former chairman of HBOS,
to consider how banks and building societies can be encouraged to start
lending again at levels that people can afford. Sir James has said that no
consensus exists.
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