Home buyers call for Stamp Duty reform

A survey of FindaProperty.com users has established that 37% of home buyers believe the Government should suspend stamp duty in the 2009 budget on all property purchases until the market has recovered.

In addition, a further 18% of home buyers believe that the Chancellor of the Exchequer should permanently increase the starting stamp duty threshold from £175,000 to £250,000, in order to stimulate the lower levels of the housing market. In total, 58% of respondents believed that some form of stamp duty reform would be the most useful initiative in helping them with their house buying process.

Michael O’Flynn, Content Editor of FindaProperty.com, comments: “November’s pre-budget report introduced a temporary increase in the starting threshold at which stamp duty is charged, which had a positive impact for some buyers.

“Rather than extending this holiday, we would hope to see this become a permanent feature and that the level is raised to reflect much higher house prices in London and the South East. The average price in London is still £298,563. A starting threshold of £250,000 -£300,000 would make a lot of sense and reflect the reality of house prices.”

The survey also looked at how home buyers would use any money saved if stamp duty reforms where introduced in the budget. Interestingly, 78% of respondents would use the extra cash on their property purchase; with 38% choosing to spend the money on renovation and decoration, 16% on moving costs and 24% on making additional mortgage repayments.

A further 9% would use the money to pay off other debts with another 7% putting the money into savings. Only 6% would spend the money on a non-property associated purchase, with 2% of respondents choosing to go on holiday and another 2% buying a new car.

Michael O’Flynn continues: “Arguably suspending stamp duty could be more effective in stimulating consumer spending than the recent cut in VAT – house purchases tend to generate a lot of subsidiary spending on white goods, furnishings, decorating and building work and all of these would generate tax income for the Revenue. In our survey 38% of buyers would spend any money saved on home improvements.”

FindaProperty.com’s research showed that 19% of home buyers were waiting for the budget before making a decision on buying or selling a property. With this year’s budget the latest in post-war history, it is possible that the traditional spring upturn in property market activity may be later this year.

More significantly, 81% of respondents said that their decision was not dependent on the budget – an indication of the serious nature of active house buyers in the current market or possibly a lack in confidence that the Government will do anything to help their cause.

House buyers also reiterated their call to the Chancellor of the Exchequer to take action to improve mortgage availability. The survey revealed that 30% of respondents would see this as the single most important initiative in helping them with their house buying process.

Michael O’Flynn comments: “There remains considerable buyer interest out there; year on year FindaProperty.com has seen a 7.4% increase in buyer enquiries (March 2008-2009). In many ways it’s a great time to buy – interest rates are relatively low, prices have come down and there isn't a huge amount of competition for properties.

“However, access to mortgage finance remains the stumbling block for many, so what we’d like to see emerging from the chancellor's red briefcase is the announcement of measures designed to introduce more liquidity into the mortgage market.”