Brown's £3bn raid on house buyers.

The Evening Standard – 22/03/07

London home buyers are being hit the hardest in a record £3.4 billion rise in stamp duty bills. Treasury figures show a 40 per cent increase in the property sales tax.

Buyers in the capital now pay an average stamp duty of £8,615 compared with £1,795 five years ago. Even though house prices have soared in London, the higher stamp duty thresholds remain at £250,000 and £500,000.

Experts say that if the thresholds had kept pace with house inflation since 1997, they would now stand at £680,000 and £1.36 million. Critics accuse the Chancellor of effectively creating a 'London stealth tax' because of high property values in the capital.

In his Budget the Chancellor ignored calls from the property sector and refused to raise the thresholds.

According to the figures - buried in the Budget 'Red Book' - total receipts from stamp duties are projected to be £14.3 billion in 2007/08, up from £10.9 billion in 2005-06.

This accounts for the £3.4 billion rise in the country as a whole - but with property sales in the capital making up around 30 per cent of the total it means Londoners will have to find £4.2 billion of the total in the coming financial year.
Conservative MP for Putney, Justine Greening, said: 'Despite all the warm words in the Budget the result has been the fleecing of the British people who have to pay more and more in stamp duty every year.

'As we have seen it is going to rise - and a hell of a lot of that will come from Londoners. We know that first time buyers in London pay more in stamp duty than in other parts of the country so for us this is really a London tax.'
Mr Brown raised the threshold for cheaper properties to £125,000 last year. But the change was of negligible help to house hunters in London where the average property now costs £300,000.
The revelation comes as Labour MPs called on the Chancellor to act over the lack of housing in the capital. The MPs say that overcrowding in London has reached chronic proportions because people cannot afford to get on the housing ladder.

A spokesman for the Royal Institution of Chartered Surveyors said: 'The Chancellor should have raised the bottom threshold of £125,000 to at least £150,000 in order to help first-time buyers on to the housing ladder given that up-front buying costs are a key issue for many buyers.'
Dr Peter Damesick, head of UK research at agents CB Richard Ellis, said: 'There is very little to help first-time buyers. Affordability for homes has not been adequately addressed.'

Paul Smith, chief executive of Haart estate agents, said: 'With the average value of a property in London now at £300,000, most first-time buyers are having to look at properties above £250,000.

'They must then find the additional three per cent stamp duty of £7,500. Stamp duty will remain a great stumbling block for many and the Chancellor has done nothing to help.'
A Treasury spokesman said: 'Close to half of first-time homebuyers and around two fifths of all homebuyers will pay no stamp duty land tax in 2007-08.

'About four fifths of all homebuyers will pay either the one per cent rate or will be exempted by starting thresholds of £125,000 or £150,000 available in 2,000 disadvantaged wards.' Meanwhile, Britons with a house abroad are set for a tax break in the Budget.

The Chancellor wants to introduce measures that allow such owners to escape certain tax charges.
Thousands of UK residents are forced to set up companies to own a holiday home abroad to avoid local inheritance laws, particularly in countries such as France, Spain, Portugal and much of eastern Europe.

But they are then hit by a benefit in kind tax in the UK which charges them for using company property for themselves.
Under plans outlined in the Budget, the Government said it will scrap the tax.

Accountant David Rothenberg, of Blick Rothenberg, said: 'Many people have bought properties through single-purpose companies to avoid local forced heirship laws, particularly in France.

'At present, that creates income tax liabilities in the UK which can run to £8,000 a year on a £500,000 property. That was manifestly unjust and this Budget will scrap the taxable benefit - better still, it will do so retrospectively."
Legislation will be published this year and in the meantime the Government will not tax anyone who owns a property through a company, so long as the only purpose of the company was to buy the house.

The move will be a boost to many of the 400,000 British owners of property abroad as the Chancellor looks to gain support among the middle classes so vital to Labour's return to power in 1997 and his own success when, as expected, he succeeds Tony Blair as Prime Minister later this year. It will also be a boost to high-fliers in the City looking to splash out on a holiday home following this year's bumper bonus round, as well as thousands of workers looking for a second home in retirement.

©2007 Associated Newspapers. All rights reserved .
Date: 22/03/2007
Publication: The Evening Standard