Does Balls' stamp duty plan completely miss the point?
Shadow Chancellor, Ed Balls, will today call for a two-year stamp duty holiday for first-time buyers aimed at kick starting the housing market.
I couldn't agree more that we need to look for ways to stimulate the economy and the property market. Heaven knows, we need something! But I am rather sceptical that this is the way forward, and suspect it might just be yet another political stunt amongst the inter-party competition to please the voting public.
According to yesterday's Sunday Telegraph (Page 8) the move, which would affect property sales of up to £250,000, is designed to increase the pressure on George Osborne as he battles to control the economic deficit and faces demands for tax cuts from within his own party. Outlining his plan, Mr Balls is expected to say: “We can do something to help aspirational men and women who want to get on the housing ladder and are finding it really hard at the moment”. He insists it is a fully costed measure and he will use his conference speech to outline how it would be funded.
It is not the funding that I am concerned about. Whatever millions the treasury loses in stamp duty will simply be recovered through some other taxation. What concerns me is the actual merit in this idea. Stamp duty on purchases between £125,000 and £250,000 is subject to 1% stamp duty, so at most it will cost £2,500. But in many parts of the country, first time buyer purchases come under the £125,000 anyway. So, in Hull for example, such a scheme will benefit a very small number of buyers. In other words, the very few first time buyers who can afford to buy a property for more than £125,000.
Perhaps Mr Balls will surprise me by proving me wrong when he outlines his plan today (I sincerely hope he does), but I very much doubt it, in which case I think he's going to need a Plan B.
Oliver Hudson Managing Director Hudson Property