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CML warns of barriers to implementation of Stamp Duty threshold

by: Mortgage Solutions
  • 24/03/2010
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CML warns of barriers to implementation of Stamp Duty threshold
The Council of Mortgage Lenders (CML) has warned that there will be genuine practical barriers to effective implementation of the Stamp Duty threshold.

It believes that it would be far simpler to exempt all properties under £250,000, rather than to impose the additional first-time buyer restriction.

The CML cautiously estimates that over the coming 12 months, there are likely to be some 136,000 newly exempt first-time buyers under the new concession, resulting in foregone revenue of £224m.

This may be largely offset by the increase in Stamp Duty to 5% (up from 4%) on around 10,000 property transactions over £1m, which the CML estimates could equate to around £250m of additional revenue.

The CML also welcomes the retention of the existing higher rate of Support for Mortgage Interest until the end of the year.

It ahs described it as a sensible and helpful measure that means those people who do qualify for help are likely to see their mortgage interest payments met under the scheme.

The CML welcomed Government plans to transfer the regulation of second charge lending – including existing second charge mortgages – from the Office of Fair Trading to the FSA.

It also welcomed the Government’s willingness to work on the industry’s proposal that an income verification service should be offered to lenders offered by HM Revenue & Customs to enable lenders to verify mortgage applicants’ income with greater certainty.

Michael Coogan, director general of the CML, said that the Budget offers a modest potential boost to the housing and mortgage market in terms of reducing transaction costs for first-time buyers, and potentially improving efficiencies for lenders.

He added: “As always the devil is in the detail, and the detail is confused. The stamp duty concession in particular looks like a tax loophole waiting to happen.

“The Budget was disappointingly light on any detail of how the Government proposes to work with the industry as a whole to find a route back to a sustainable and reliable funding framework to safeguard the ability to deliver the lending needed to support future demand.”

 

 

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