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Cuts in stamp duty encourage London housing market vacuum

When the Chancellor announced a cut in stamp duty, the government hoped it would reinvigorate a stagnating housing market.

While buyers and sellers alike in cheaper areas of the UK breathed a sigh of relief, Londoners have been left asking, “What about us?”

Director of SecureASale, Tim Jackson explains, “In London, very few properties can be purchased for under £175,000 especially those anywhere near good transport links or close to the centre of town. In fact, what we have seen is properties that are probably worth up to £190,000 being dragged back down to £175,000 as there is a vacuum in between these two figures where purchasers refuse to deal.”

Alistair Darling dawdled over the decision to cut stamp duty for weeks, ignoring calls from political commentators, housing professionals and the opposition to cut stamp duty. This time wasting no doubt caused even more damage to the deflating market as potential buyers held out for a conclusion to the flourishing rumours.

News of economic strife has become as regular as sunrise, and whilst the government hashes together multi- million pound bail-out plans, many critics are asking why London’s property market has been left floundering. Jackson adds, “Rather than helping the housing market back on its feet, this measure just offers nothing positive for London as it is isolated. The chancellor should have lowered stamp duty for all if he really wanted to get the housing market going.”

As the media continues to dig up evidence of bad banking practices encouraged at the risk of customer’s savings, for London’s homeowners, the cut in stamp duty feels like yet another punishment for something that wasn’t their fault.

Jackson notes, “Historically, Stamp Duty was a tax levied only on the wealthiest purchasers and was not designed to penalise first-time buyers and young families and couples. However, due to fiscal drag, (the policy of keeping thresholds static while the market rises significantly), more and more buyers have been dragged into paying it. While it is now an important and necessary component of government funding, it is ultimately regressive as it punishes the less wealthy in society far more than the rich few and is probably as unfair as inheritance tax.”