Gordon Brown in tax bid to beat house crisis

Jul 13 2008 By John Mceachran

STAMP duty could be abolished or slashed on some house purchases in a bid to beat the slump in the market.

Gordon Brown has ordered a Treasury team to draw up plans for reform to tackle the growing crisis.

Their proposals could mean some new housebuyers could be exempt or the price bands at which the tax is payable could be increased.

A Treasury spokesman said yesterday: "Ministers and officials are very exercised about it and they are looking at a lot of different measures."

Buyers nowpay one per cent of the purchase price on houses over s125,000, three per cent over s250,000 and four per cent over s500,000.

That works out at s1500 on the average Scots house price of s150,000.

The tax netted s6.5billion for the Treasury last year but it is now seen as deterring buyers as the value of homes plummets.

A spokesman for the Royal Institute of Chartered Surveyors said: "A young couple moving from their first s200,000 flat to a s300,000 family home now pay s9000 to the government.

"This was not an issue when they saw significant annual growth in the value of their first home - but it will now be a key consideration."

The RICS asked for the reform of stamp duty at a meeting they held with housing minister Caroline Flint last week.

They argued young buyers and poorer pensioners should be exempt from the tax and the rate should be reduced on properties selling for less than s1million.

A government spokesman said: "We are working every day with stakeholders to look at what more we can do during this difficult period for the housing industry.

"The minister explained to the RICS that, like all other taxes, stamp duty rates and thresholds are kept under ongoing review as part of the budget process."

Chancellor Alistair Darling held talks with senior Treasury officials and economists about stamp duty during a meeting last month at his country residence at Dorneywood.

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