The current holiday on stamp duty – due to end at the close of 2009 – will not be extended, the Chancellor Alistair Darling has said in his Pre-Budget Report today.
The news will come as a disappointment to potential home-movers and first time buyers who have not yet taken advantage of the suspension of paying stamp duty on properties worth between £125,000 and £175,000.
There had been hope to the contrary - that the Government would extend the current suspension of stamp duty until the housing market had showed stronger signs of recovery, but steadily rising house prices and an ease in mortgage lending have proven enough to see a stamp duty exension ommitted today.
The Chancellor made no mention of extending the holiday on stamp duty, but was quick to highlight how it has served its purpose: "By the time the stamp duty holiday finishes at the end of this month, I expect 240,000 homebuyers to have been helped," he said.
Mr Darling recognised that the absence of this assistance will leave a void of financial support for homeowners, and with unemployment likely to rise further, "it would not be right to withdraw all support now for homeowners," he added.
Mirroring last year's Pre-Budget Report, when Mr Darling extended the Support for Mortgage Interest scheme to assist those who had lost their jobs with paying their mortgage, he announced that this additional support will be extended for a further six months.
Abbey has expressed disappointment at the lack of an extension for stamp duty in the Pre Budget Report, which came into effect in September 2008. Nici Audhlam-Gardiner, director of mortgages at Abbey and Alliance & Leicester, said that the news is disappointing "not only for first-time buyers looking to take their first step onto the property ladder but also for the wider housing market."
Ms Audhlam-Gardiner described first time buyers as "the lifeline of the housing market", adding: "it's a shame to see this support come to an end at a time when the wider housing market is still in recovery."
She urges any buyers currently in the process of purchasing to ensure that the sale is completed before 31 December, to save themselves up to £1,750 before the Stamp Duty holiday comes to an end.
Abbey has also called on the Government to do more to help first-time buyers, including a wider shake-up of the stamp duty system.
Andrew Hagger of Moneynet.co.uk described the decision to end the stamp duty holiday as a "short sighted move."
"The Chancellor admitted that the recovery is fragile, so why put the dampers on the housing market just when it has started to show some positive signs," he said. "Because lenders are being over cautious, first time buyers are already faced with finding deposits of 10% to 20% so having to pay an additional £1250 plus in taxation may see demand for property at the vital first rung of the property chain fall away."
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