Stamp duty change comes into effect on 1 January
Britons planning to purchase residential properties early in 2010 may find themselves paying an extra 1 percent in taxes, thanks to changes to the country’s Stamp Duty. Ever since September 2008, those purchasing residential real estate valued between £125,000 and £175,000 enjoyed a stamp duty waiver, but all of this is going to change in January. Starting in the new year, anyone purchasing a home valued at more than £125,000 will be required to pay the 1 percent stamp duty.
The stamp duty holiday was initially conceived when property prices in Britain started to show a marked downward trend. The goal was to limit the damage to the real estate sector, when prices started collapsing in September 2008. While prices are no longer falling by such proportions in much of the country and as values start to stabilize, the market is looking healthier than it did a year ago. But those who support an extension of the stamp duty waiver note that the real estate sector is currently in a protracted period of stagnation, and therefore is not out of the woods just yet.
There is some disagreement as to precisely how much the stamp duty waiver cost the government in lost revenue. According to the government’s own estimates, this amount may have reached £615 million. But the Council of Mortgage Lender’s figures are much lower—the organization believes that the total amount probably stands at around £500 million. This is mostly due to the fact that the property market has been sluggish for much of the year, with relatively few sales.