PKF calls on the Chancellor to kick start the housing market in the East of England

Experts at the East Anglian offices of PKF Accountants & business advisers are urging the Chancellor to kick-start the economy and ailing housing market in our region by temporarily raising the Stamp Duty Land Tax (SDLT) nil rate band limit, in his Pre-Budget Report.

Currently, SDLT is due on properties costing over £175,000 but PKF says the threshold should be increased to £1million.

The Government has hinted that a £15 billion giveaway is needed in order to stimulate the economy and temporarily raising the SDLT nil rate band is a sensible measure to get the property market moving again, says Peter Harrup, tax partner at PKF's Ipswich office.

Peter explains: "The SDLT statistics for 2006-07 and 2007-08 show the Government received £6.5 billion and £6.6 billion respectively on residential transactions. The figures for 2008-09 are likely to be much lower, so introducing a temporary extension of the nil rate band will not cost the Chancellor a huge amount more than doing nothing.

"In early September, the Government did introduce a one year holiday on stamp duty, raising the minimum threshold by £50,000 to £175,000. But the statistics prove that this was not a bold enough move - certainly not for London and Southern England: in September the number of mortgages for new house purchases fell by 15% according to the Council of Mortgage lenders."

Peter continues: "The pressure put on the banks in the wake of the latest interest rate cut, shows that the Government sees a recovery in the housing market as a major step to a wider economic recovery. Raising the SDLT threshold for one year will make buying a house in 2009 a much more attractive option for many and the knock on effect of stimulating an area of the economy that is desperately struggling, is obvious."

Another measure that has proved effective in the past could be to re-introduce the Mortgage Interest Relief at Source (MIRAS) scheme for basic rate taxpayers. From 1983 to 2000 the scheme enabled borrowers to receive tax relief on mortgage interest at the time the interest was paid. A similar scheme put in place now for first time buyers, to give relief for the first five years of their mortgage, would make mortgages more affordable and could help to get the property market moving.

But, Peter concludes: "As the failure of the package announced in September proved, the measures required need to be bold and the simplest way to kick start the housing market is to provide temporary relief from SDLT."