FREEZE ON STAMP DUTY THRESHOLD PROVIDES LITTLE COMFORT TO HOUSE BUYERS
Failure to raise the Stamp Duty threshold in today's Budget means a record number of home buyers in east central Scotland will be liable to face the tax in the coming year, according to figures released by Edinburgh Solicitors' Property Centre (ESPC).
The decision to freeze the lowest threshold at its current level of £125,000 came in spite of a year in which house price inflation exceeded 10% in many areas, far outstripping the projections of many analysts.
With growth expected to continue at between 7 and 10% in 2007, as many as 9,300 house buyers in Edinburgh alone face paying Stamp Duty in the coming year, an increase of more than a thousand on 2006 levels.
Commenting on the announcement, Ron Smith chief executive of ESPC said: "Over the last decade, increases in the Stamp Duty threshold have simply not kept pace with the rise in property prices we have witnessed. Since Labour came to power in 1997 the average house price in Edinburgh has almost trebled from £68,195 to £200,848 so far this year. Over the same period however, the lowest threshold for Stamp Duty has barely doubled from £60,000 to £125,000"
"To put this disparity into some sort of perspective, the proportion of homes selling in the Capital in 1997 that were liable for Stamp Duty stood at around 50%. Last year this figure had risen to over 70%, and with annual inflation so far this year in excess of 16% in Edinburgh, the number of home owners affected only looks like rising further."
Mr Smith went on to say that the decision to make new 'carbon-zero' homes under £500,000 exempt from the tax would do little to redress the balance.
"The people most negatively affected by yesterday's decision, such as first-time buyers and low-income households, are unlikely to be able to afford to live in such new developments, meaning they will not be able to take advantage of savings in this area. Efforts to improve the environment are of course admirable, but this may come as little consolation to buyers trying to get a foot on the property ladder."
There was some relief for homeowners in what is likely to be Gordon Brown's last Budget however, with the news that the Inheritance Tax threshold will be raised from £285,000 to £350,000 in 2010. Figures from ESPC show that the percentage of homes affected by Inheritance Tax had risen seven-fold since 1997, leading many experts in the property market to call for a significant rise in the minimum threshold.
Issued by ESPC(UK)Ltd marketing & public relations
For further information, please contact:
Ron Smith
tel 0131 624 8520 email marketing@espc.com