RICS: Stamp duty could have detrimental effect on housing market

The end of the current stamp duty holiday, which is scheduled for December 31st, could have a "detrimental effect" on housing market recovery in some of the UK's weaker regions, according to new research.

A drop in activity, following the end of the temporary £175,000 threshold, is expected by surveyors in the West and East Midlands, Wales and Scotland, according to the Royal Institution of Chartered Surveyors (RICS).

The institution claimed that while some areas like London or the north of England, where average prices are well above or below the threshold, would not be affected by the end of the holiday, other areas would notice a greater change.

Simon Rubinsohn, RICS chief economist, said the additional transaction cost was a "worry" to many buyers and a threat to the market in areas that were still seeing a weak price environment.

"A return to the status quo will be of benefit to no one and as such RICS believes that rather than simply reverting back to the old structure for stamp duty, the imminent change provides an opportunity for the government to introduce a wholesale restructuring of the tax," he said.

"Specifically RICS favours moving from the current slab structure to a marginal system with no homebuyer paying anything on the first £150,000 of their new home."

The new threshold was increased from £125,000 to £175,000 on September 3rd 2008 in a bid to encourage more people to buy their own homes.

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