Tories relaunch promise to abolish stamp duty for most first-time buyers

It was a policy that Conservatives believe was pretty much drowned out by last year's inheritance tax announcement; the promise to abolish stamp duty for all first-time buyers on properties up to £250,000 in value.

Shadow Housing Minister Grant Shapps MP and Kirstie Allsopp were on College Green a little earlier today to highlight the policy on the day that 120 housing experts gather in Westminster to advise the party's housing policy review.

The fact that 120 industry experts are turning up to a Tory conference is another sign of how fashionable the party is at the moment.  There were four TV cameras and a gaggle of journalists at this morning's photo opp* as if to prove the point.

Kirstie Allsopp is obviously a big attraction and journalists were encouraging her to stand as a Tory candidate.  Interviewed by Channel 5's Andy Bell, Ms Allsopp warned that the housing market was facing a perfect storm with the HIPS fiasco, the credit crunch and high stamp duty all combining to make life very difficult for first-time buyers, in particular. 

* The woman photographed with Grant and Kirstie is Sophie, struggling to get on the housing ladder.

Comments

[Simon Wentworth]

HIPs are proving totally useless. Yet another tax. I paid several hundred pounds for a man to spend 30 minutes ticking boxes on a form. Outrageous. And I still have to pay for a survey on the house I'm buying. Cameron should promise to scrap them.

[Andrew Woodman]

We've already pledged to scrap them Simon

[Deputy Editor]

Grant Shapps announced the policy of scrapping HIPS in Blackpool.

[Yarmouth Tory]

Whatever political persuasion they are, the Brits are really into getting on the property ladder. Maggie Thatcher understood that years ago with "the right to buy" Let us not underestimate how important policies like this could be to our success at the next General Election. Also Grant Shapps is one to watch for the future. Kirsty a PPC ???? What do others think of that? She would certainly stand up well compared to a lot of the 1997 " Blair Babes" intake, that are looking decidely jaded now. Not that many of them will need to worry after the current parliament......

[[email protected]]

It would be better if this applied to all not just 1st time buyers,else all sorts of tricks will be pulled.

[Gerard Rice]

a) Just to clarify, we're having a housing review where we're asking a peer's daughter - a TV presenter - for policy help on home-selling.

Not housing or auction specialists. A TV presenter.

b) Does **anyone** believe the stamp duty policy will help without a blind auction system? And without HIPs, how do we get blind auctions?

I sat next to Grant Shapps when he came to our constituency dinner. He's genuinely terrible.

[Bexie]

Replace Stamp Duty with a registration fee that reflects the cost of putting the property exchange onto the Land Registry database. £50 should about do it.

Otherwise get rid of non-exit transaction charges alltogether. (that is to say any form of tax on transactions made within an investment fund, in the case of a home the primary home.)

[Ken Stevens]

I certainly empathise with the motive. However, I have a little niggle that it might just be viewed by some sellers as enhancing buyers' available funds so as to add correspondingly to the price, i.e. no net gain (albeit that at least it would thereby be funded in the mortgage rather than by upfront cash).

That being the possible case, it might be better for stamp duty to be paid by sellers rather than purchasers. After all, in each individual transaction it is the seller who receives money from the deal and any system of taxation should where feasible be based on ability to pay. Ongoing tactical management by government of the rates of stamp duty in various price bands might then be utilised as a damping mechanism on house price inflation.

[Peter Harrison]

Gerard - Kirsty Allsop may be best known as a TV presenter, but she is also a property search agent, a job she has done for over 10 years. So she is a housing specialist. As is Owen Inskip who is also part of the review and has over 30 years residential property experience.

And in what way would blind auctions help? Most first time buyers would be frightened off by a system which required them to submit a bid without any idea of the likely level of other bids. Removing stamp duty from houses up to £250k will reduce the cost of buying by up to £2,500, regardless of whether or not blind auctions are in place. So clearly it this policy helps. It may not be much but every little bit counts!

Personally, I think blind auctions would be a huge disincentive for first time buyers.

[StevenAdams]

Ken Stevens @ 12.45

You may well be right - sellers may just price a few thousand higher... but for me this is a principle. I can negotiate with house sellers and depending on the market I will succeed or fail.

However, I can't negotiate with a government looking to keep the tax burden as high as possible in every aspect of my life so that they can introduce expensive initiatives such as HIPs.

No... hold that; I CAN negotiaite with those governments... I can elect the opposition that promises to help me rather than hinder me ;)

[Ken Stevens]

P.S.

.... and a vague thought occurs that stamp duty bands might be aligned to Council Tax bandings, eliminating the need for periodic reviews of house price levels and regional variations.

[NigelC]

I am led to believe, but it is not confirmed, that the Government will be making a big housing announcement on Monday by publishing the much delayed and controversial East of England Plan.
I expect they will try to take control of the housing agenda again.

[Fred Makepeace]

Am I the only one that thinks if you scrap stamp duty it will simply lead to an increase in the price of housing.

Therefore the first time buyer is no better off and our Government loses an income stream.

It's very basic economics surely!!!

[Chad Noble]

LoL. The Tories are indeed preparing for government by taking on Labour's much criticised approach of re-announcing policies!

Will Gids re-announce his 3.5 billion per annum non-dom levy....

[Ken Stevens]

StevenAdams | May 08, 12:56

My thoughts were predicated on stamp duty being as valid a method of taxation as any other, given that if, e.g., stamp duty was abolished, the government would look to recoup the lost revenue by some other means. Heaven forfend that a government of any complexion should consider trimming its expenditure so as to minimise taxation!

HIPs don't even feature in any measured debate regarding not-too-unpalatable methods of taxation. A spurious and deleterious means of theft guised up as environmentalism ( and not alone in that category)!!!!!

[David Cooper]

What if stamp duty on residential conveyancing deals was labelled "house purchase tax"? That might bring home the sheer immorality of a system that effectively told individuals who were about to undertake one of the most enormous financial transactions of their lives that they would be required to give a large sum of money to the government at the same time.

Rather than tinker with the current regime and expose it to loopholes and avoidance schemes e.g. "nominee" first time buyers, why not restore it to the pre-1997 rates with a starting threshold of £250K or abolish it altogether and fund the lost revenue by cutting out waste?

[Richard North]

HIPs implements EU Directive 2002/91/EC -do I sense another "elephant in the room"?

[matthew]

The problem is surely that a first-time buyer's house should not cost £250,000. It's too much.

In the USA people get twice the house for half the money.

Why do we put up with ridiculously overpriced property, which results in a poorer quality of life for us all?

Something should be done about the 200% increase in house prices in a period where wages have risen by only 60%. Clearly people's standard of living has been eroded.

[Jennifer Wells]

Can someone please explain to me why we're advising people to buy their first homes ahead of a possible housing crash?

I'd advise a little more silence from our spokespeople on this subject.

[Chad Noble]

"Something should be done about the 200% increase in house prices in a period where wages have risen by only 60%. Clearly people's standard of living has been eroded."

Aha. You mean the old imbalance of why did the BoE actively ignored the massive house price increases in 2001 and 2002 (controlling house prices not in its remit blah blah - govt saying rates are historically low blah blah) but when they start falling, suddenly the BoE is under pressure to prop up an overinflated market?

Well, having lots of equity in their homes, people felt wealthy and borrowed more and thus did not realise they how highly taxed they were and that they were actually just getting themselves deeper in debt.

A clever trick until the shit hits the fan.

And this is the perfect re-entry point for Mr Wadsworth...

[Peter Harrison]

Jennifer - I don't think we are advising people to buy a first home, just making it easier for them to do so. We can't implement this right away in any case - we aren't in government. However, if prices are crashing, stimulating demand is a good thing!

Richard - EU directive 2002/91/EC only requires the provision of an energy performance certificate. The rest of the HIP is not, as far as I am aware, required by any EU directive. Actually, I think the initial objective of HIPs (to speed up homebuying and make it easier) was good. Unfortunately, the various items that were dropped before implementation have rendered them worthless.

[NigelC]

Peter 15.04
I don't think there is a shortage of people who would like to own their own home but currently there is a shortage of finance. I don't think we need to stimulate demand!

[OnionC]

We are going horribly wrong by publicly reinforcing an association with one of the worst house price inflation rampers in England (Ms Allsop). The housing market is crashing (faster than in the early '90's) and there is nothing that can be done to save it. Nor should there be - lower prices help first-time buyers and those 'moving up' to larger homes.

Keep the policy - ditch the TV presenter. The public association with her is only damaging the party at the moment. And that damage will increase the more homes get repossessed (and the more dreams of wealth through 'playing the housing market' fuelled by property porn TV turn to waking nightmares)

[J Cooper]

This is an ill-thought out and embarrassing stunt. Kirstie Allsopp is best known for "property p0rn" programmes which have been a not inconsiderable part of the current disastrous housing bubble which has ruined the economy. "housing specialist" don't make me laugh. She has a vested interest in the pyramid selling scheme which is the UK housing market.

Helping first-time buyers with stamp duty at the moment is akin to "helping" alcoholics by paying for their vodka. The sooner the party dissociates itself from Ms Allsopp and her ilk the better. This is depressing low grade stuff for a putative party of government. I and many others are crying out for a decent opposition, not a bunch of no-marks clowning around like this.

JC - Ex tory member :-(

[passing leftie]

So, you cut stamp duty. First, how do you pay for it? And, I can just see all those estate agents running round going "oh, we must knock a couple of grand of the asking price, they've just knocked stamp duty down."

How about increasing the personal allowance and scraping it back at the 40% band instead?

[Rob H]

Seriously, why do you have anything to do with Kirstie Allsopp?

She believes in:
1. Ever rising prices
2. FTBs getting into maximum debt.

She fails to see that:
1. UK houses are 30% overvalued - ask nearly any economist
2. Average prices over 3-4x salary are unsustainable (now at 6x salary)
3. Rises in prices have not been caused by people's great investment decisions, but in large part by loose lending (now being rectified by the credit crunch).
4. Houses are homes and not investments.

Her rhetoric on stamp duty is irrelevant. If she was calling for sustainable house prices at 3-4x average salary, I may be inclined to vote for her (if she stood as an MP).

As it stands I have serious doubts that the Tories have a housing policy when they wheel out the Allsopp media friendly but fundamentally flawed property porn dinasour.

[Stewart Geddes]

Why should first time buyers be exempt from stamp duty when the rest of us have to pay it?

Come to think of it why do we have stamp duty at all? Could it be that the Socialists of long ago objected to the private ownership of property?... And we never bothered to abolish an iniquitous tax.

[roy s]

Hmmmm three separate posts using the words "property porn" in denigrating Ms Alsop?? Do I sense a combined effort from some direction?

[david barker]

Kirsty Allsop has a vested interest in keeping house prices high as she has based her career on HPI. She appears to have very little understanding of economics or how markets operate. All she spouts on about are the smokescreens of HIPS and stamp duty. The fact is houses are overpriced and are falling.
How could someone like this represent the conservative party?

[Richard Calhoun]

Think we should make it £300,000 and then that will take all first time buyers out of stamp duty, even in the South.

It will also put pressure on Labour

[Richard Calhoun]

PASSING LEFTIE

'how do you pay for it'

You cut spending that's how!

Simple isn't it??

[Richard Calhoun]

Am I the only one that thinks if you scrap stamp duty it will simply lead to an increase in the price of housing.
Therefore the first time buyer is no better off and our Government loses an income stream.
It's very basic economics surely!!!

Posted by: Fred Makepeace | May 08, 2008 at 13:00

I sincerely hope you are the only one Fred, it is certainly not basic economics, just wait and see the housing market over the next 2 years

[Ken Stevens]

Richard Calhoun | May 08, 21:49
"I sincerely hope you are the only one Fred,"

'Fraid not.

Also guilty as charged m'Lud, as per my May 08, 12:45 above.

[Tanfield]

Quite apart from the other valid points raised above how do you define a first time buyer? Whast if it's a joint purchase and one of the buyers has owned or does already own (eg buy to let) a property before and the other has not? If this goes ahead it would have to be very carefully drafted to avoid abuses.

[Ken Stevens]

Tanfield | May 09, 11:27
"..how do you define a first time buyer? "

.. Which is perhaps why it would be preferable to make Stamp Duty a sellers' tax rather than a buyers' tax. It would either be neutral (though at least first-time buyers wouldn't have to fork out cash upfront) or potentially beneficial if used in conjunction with Stamp Duty banding based on Council Tax bands.
E.g. Band A 0%, band B 1/4%, Band C 1/2%, etc.

[Mark Wadsworth]

Fred Makepeace is quite correct. Governments of both parties have experimented with Stamp Duty-free zones over the years, all that happens is that prices went up.

Which is not to say that Stamp Duty is not, taken in isolation, a truly evil tax.

[DBC Reed]

House prices stayed relatively flat during the big government era of the late 50's and 60's. The fact that there was Income tax on the rental value of owner-occupation plus tight credit controls must have had something to do with it.Then the Conservatives got rid of both . Then they got a stand-in Chancellor when MacLeod died and he cooked up a giveaway budget that destabilised the economy for a decade.

[KelseySmith]

Apart from the other valid points raised above how do you define a first time buyer? What if it's a joint purchase and one of the buyers has owned or does already own a property before and the other has not? If this goes ahead it would have to be very carefully drafted to avoid abuses.