Interview on proposals to defer stamp duty
5th August 2008
Alan spoke on the World at 1 today on government proposals to boost the housing market by deferring stamp duty for a limited period. He said:
Alan Whitehead MP: “It is a deferral, I think, of the proposal of the 1% stamp duty on houses up to £250,000, and that could help first time buyers. And that would be helpful in the decision they are making over whether to enter the housing market. That would be useful in terms of houses in my part of the world, which are in that range for first time buyers, so if it stimulates the first time buyer market, then that would be a good thing."
John Stewart: “I wonder if there is much evidence that this is actually something that stops people buying a house or whether it is really about other things, like the difficulty in being able to borrow money or indeed a general sense of confidence.
Alan Whitehead MP: “Yes, of course, the main issues concerning house purchase and investing in property at the moment are much wider than whether you have a decision to make on stamp duty or not.
But I do think that there are a range of issues which go towards the question of whether a house is purchased and whether movement in the housing market takes place. This is just one of them and it is a decision which is essentially taken, as it were, outside the mortgage process itself.
If, therefore, the idea that your stamp duty is being deferred and, therefore, the cost of purchasing a house is marginally reduced at the time of the purchase, then perhaps that’s one thing that helps, but I don’t think we should be under any illusion that that is a magic bullet. There are probably no immediate magic bullets for the housing market, because there are large issues about the question of the nature of accrued interest mortgages, the question of confidence in the housing market, but I think that there are a number of measures which could help stabilise the purchasing process are these are good things right now.
John Stewart: “And if it is a deferral, presumably you would still have to pay it at some point?
Alan Whitehead MP: “Again, it is not clear exactly what that means in terms of the proposal, but it would perhaps mean that when the house was sold at a later date, it would be part of the sale process and that would enable, as it where, the initial stamp duty to be rolled up into the initial housing investment and if perhaps that were to be accompanied by other measures, in terms of assisting with the initial purchase, that would be quite a solid way to go.
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