A stamp duty ‘holiday’ would not provide a solution for the market’s current problems, according to research firm Capital Economics.
Reports say the government is considering a deferral of stamp duty payments to kickstart the housing markets.
Stamp duty is paid at 1% on homes bought for between £125,001 and £250,000, 3% between £250,001 and £500,000, and 4% over £500,000.
Capital Economics said today a similar move in the 1990s created a temporary, sharp compression in the time taken to complete the average transaction as buyers tried to complete deals before the holiday ended.
Property economist Kelvin Davidson said the spike in transactions in the period was not repeated in data for mortgage approvals.
He said: “That precedent and the fact that what now appears to be under consideration is simply a deferral of the stamp duty payment makes it hard to see what such a measure would achieve.”
“We doubt it will make it off the drawing board.
“At the root of the housing market’s current problems are a lack of mortgage credit and a growing expectation among homebuyers that prices have further to fall.
“Neither deferring stamp duty for some buyers, nor offering them tax-free savings accounts, will stimulate the supply of mortgage credit or alter the fact that, despite recent falls, house prices remain too high.”
