12
Feb
Stamp duty change prompts rush by house buyers
A rush to beat the end of the stamp duty concession saw a big
rise in loans made to house buyers in December, says the Council of
Mortgage Lenders (CML).
There were 62,800 such loans, up by 23% from November and 90%
higher than in December 2008.
The number of loans made to first-time buyers also jumped in
December, by 26% from November, to 24,900, which was the largest
number since November 2007.
The stamp duty threshold dropped back to £125,000 on 1
January.
The government concession, which had temporarily pushed the
threshold up to £175,000, had been aimed at halting the rapid
slump in the property market.
"55% of house purchase loans were on properties costing under
£175,000 and therefore exempt from stamp duty, up from 51% in
November," the CML said.
"This clearly indicates a rush to complete purchases before
January, when stamp duty would have added an additional 1% of the
purchase price onto the transaction costs," it added.
Sales
Completed sales of homes below the temporary stamp duty
threshold, in England and Wales, also rose sharply in the last
three months of 2009, other research showed.
Transactions in areas where the average price was below
£175,000 increased by 10.2% compared with the previous
quarter, according to a report from the analysts Acadametrics.
But sales in areas where the average property price was above
£175,000 rose by just 2.2% over the same period.
"Without doubt, year-end activity was heightened by the
anticipated end-of-year closure of the stamp duty holiday for
properties up to £175,000," said Peter Williams, chairman of
Acadametrics.
Past year
The CML's figures showed that the number of loans made to house
buyers in the whole of 2009 was barely higher than the previous
year, at 517,000.
That was still only just over half the number lent in 2007,
before the effects of the credit crunch were felt fully.
The number of loans made to people who were re-mortgaging, for
instance by obtaining a new deal with another lender, slumped by
more than half to 408,000 loans.
First-time buyers still have to put down an average deposit
worth 25% of the value of the property they are buying.
"It has become much harder for first-time buyers to get onto the
housing ladder in recent years," the CML said.
"There were less than 200,000 in both 2008 and 2009, less than
half the longer-run average."
Property prices
The Council of Mortgage Lenders (CML) had previously said that
the stamp duty tax break was of greatest benefit to buyers who
lived in the South East of England, but outside London.
But the Acadametrics report found that sales spiked on
particular types of properties.
In the South East and South West regions of England, there was
growth of between 8% and 13% in the purchase of flats and terraced
properties in the final three months of 2009, compared with the
previous quarter.
The larger, more expensive properties in the same areas saw a
decline in the number of properties sold of between 1% and 4%.
On a regional level, the areas with the biggest fall in
transaction numbers over the same period were Buckingham (down
13%), Herefordshire (down 11%) and Nottingham (down 8%).
Areas with an increase in property transactions included
Leicester (up 24%), Thurrock (up 23%) and Staffordshire (up
20%).
source: www.bbc.co.uk/news Friday 12th Feb
2010