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April 2010

But where's the joined-up thinking?

Budget comment by Mike Goodman

Exempting first time buyers from stamp duty  on transactions under £250,000 will obviously benefit the mass housing market , but does not smack of joined up thinking.

There was a near three-month hiatus between the announcement and  the end of the Stamp Duty holiday on deals under £175, 000. The timing  suggests it was a political move to spook the Conservatives, who first suggested the idea.

The new concession is obviously unfair to first time buyers of homes in the  £125,000 to £250,000 price range who were too late for the old concession and completed too soon for the new one.

Had the Chancellor announced the new concession , and the rise in duty for £million-plus homes in the Pre Budget report, the changes could have followed on the old ‘holiday’ on January 1 this year .

The Council of Mortgage Lenders estimates that had the FTB exemption been in force in 2009, 92 per cent of FTBs would have benefitted.

The CML estimates that the £250 million loss of revenue through the new FTB exemption would be offset by the rise in stamp duty on transactiona above £1 million.

A London propertty investment firm thinks the heavier duty on more expensive properties might prompt buyers to chase properties just below the £1 million threshold.

The Inland Revenue definition of FTB is a restrictive one - it is someone who has not held a major interest in a property anywhere in the world, so foreign buyers who already own property in their own country would not enjoy the exemption.

David Livesey, group chief executive of Connells described the FTB exemption as “a good move for confidence”, adding: “The real problem for first time buyers is the lack of availability of 90 per cent loan to value mortgages.” He said it was difficult to work out how much the measure would boost Connells sales.