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CML Asks Government for Reprieve for FTB Stamp Duty
The concession on first-time buyer stamp duty is due to end next March, but the Council of mortgage lenders is asking the government to reconsider as data shows the previous concession on stamp duty caused a spike in sales followed by a slump. The CML is worried that ending this concession could prompt another slump which would obviously not be very good news given the fragile state of the market.
HM Revenue & Customs is due to publish a report on the impact of this current concession, but it seems unlikely that the cost to the government has been very high due to the relatively low number of transactions, especially given the impact of the new 5% stamp duty rate on properties sold for more than £1 million, and 87% of stamp duty revenue comes from property worth more than £250,000. In 2007 and 2008 the revenue from stamp duty peaked at £6.7 billion, but this figure has now dropped to just £4 billion. Even so it is not likely to increase substantially if this current concession is allowed to expire.
The CML's argument is that the modest increase in revenue obtained by reimposing first-time buyer stamp duty would be outweighed by the possible fall in transaction numbers. It points out that even though there is no real evidence to show the concession has improved first-time buyer numbers, it's highly likely they would have been fewer had it not been implemented.