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The Treasury has unveiled a stamp duty holiday that will see the threshold property value lifted to £175,000.

From today until September 2009, any house worth less than £175,000 will not have to pay the 1% stamp duty charge. Until now the threshold property value for the tax was £125,000.

The move will provide an exemption from stamp duty land tax for land transactions consisting entirely of residential property sold for £175,000 or less.

The decision follows mounting pressure on the Government to take action to reinvigorate the housing market, but has been met with anger by many who see it as a weak answer to the housing market crisis in the UK.

Peter Williams, executive director of the Intermediary Mortgage Lenders Association says the move is just to gain votes. He says: "These measures will help certain individuals and have a positive impact on confidence but in no sense are they market transforming. They do nothing to tackle the fundamental issue in the market - the lack of funding which is stopping people get hold of mortgages.”

A spokesman for the Royal Society of Chartered Surveyors says: “Nine out of 10 of total transactions will be unaffected by this band movement.
“The move will have little impact in London where the average price a first time buyer pays is around £260,000. At best the relief will save buyers £1750, a drop in the ocean of the £27,738 we estimate as the average upfront costs of buying a home.”

The Government also launched several other schemes to help homeowners: a first-time buyer loan scheme that will give young potential homeowners up to 30% of the property’s worth, free for five years.

There is also a mortgage rescue package for those facing repossession: struggling homeowners will be allowed to sell part or all of their home to a council or housing association, who will then let the homeowner rent back the property.

There have also been changes to the Income Support for Mortgage Interest: now any homeowner with a mortgage up to £175,000 will be allowed state help with their interest payments after three months if they find themselves in difficulty.

David Harker, chief executive of Citizens Advice says: "These schemes could be an effective way of keeping people who lose their jobs suddenly and have no savings to fall back on in their homes.

"For these measures to work, lenders must play their part by showing forbearance, treating people in difficulties sympathetically and fairly, being willing to negotiate reasonable, affordable repayment arrangements with borrowers, and ensuring they take possession action only as a last resort.”

Caroline Flint, Housing Minister says: "We are determined to continue to do everything possible to promote long- term stability and fairness in the housing market.

“The measures announced today will go significantly further in supporting families who may be facing difficulties at the moment, while ensuring we maintain our focus on delivering more affordable homes over the long term. We must ensure that repossession is only ever a last resort.”

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