Homebuyers will not have to pay stamp duty on properties costing £175,000 or less for the next 12 months.

The current £125,000 threshold will be raised as part of a package of measures aimed at boosting the housing market.

Someone buying a home for £175,000 will save £1,750 under the scheme, which is likely to cost the Treasury £600m.

The government estimates half of all property transactions will now be exempt from stamp duty – up from one third when the threshold was £125,000.

‘Do all we can’

Prime Minister Gordon Brown said the package of measures – including help for first-time buyers and families facing repossession – showed the government was taking action to help people through difficult times.

“Home owners need to know that we will do everything we can to keep the housing market moving,” he told BBC News.

“They are not going to help the vast majority of families facing a rising cost of living and falling house prices” George Osborne, Conservatives

But the Conservatives – who say they would scrap stamp duty for first-time buyers on properties worth £250,000 or less – said the measures were a short-term survival plan to keep Mr Brown in a job.

The government has not said how it will pay for the £600m estimated cost of the stamp duty move.

Chancellor Alistair Darling said he would reveal more details in his Autumn Pre-Budget Report.

He said the government was also considering ways of increasing the availability of mortgage finance.

But – in an echo of his weekend interview with The Guardian in which he said the economic downturn could be worse than previously thought – he said other factors would be crucial to the housing market’s recovery.

First-time buyer Adam O’Neil benefitted from the changes

“We face a unique set of circumstances that we have not seen in generations, where you have a credit crunch and where you have high oil and food prices.

“But I remain optimistic, as I have said on many occasions before, that we can get through it.

“We will get through it and today’s measures, helping the housing market, are one example of how the government can help people.”

Other housing moves announced by the government include:

“Free” five year loans of up to 30% of a property’s value for first time buyers of new homes in England
Extension of powers for councils and housing associations to be able to pay off debt for homeowners who can no longer afford mortgage payments and then charge rent.
Shortening from 39 weeks to 13 weeks the period before Income Support for Mortgage Interest is paid
Bringing forward spending from future years to encourage more social housing to be built
The funding for these measures, which unlike the stamp duty move will only apply in England, has been previously allocated and brought forward, the Treasury said.

Under the new loans system, called HomeBuy Direct, households in England earning less than £60,000 will be offered loans free of charge for five years on new properties, co-funded by the state and developers.

‘Difficult conditions’

Once the five-year “free” period is up, homebuyers will be asked to pay a fee, the Department for Communities and Local Government said – although no more detail of this was provided.

In a statement, the DCLG said: “Not only will this [HomeBuy Direct] help first-time buyers… it will help the housebuilding industry weather difficult conditions.”

“This looks like a hotchpotch of measures thrown together to save Gordon Brown’s political skin” Nick Clegg, Lib Dems

The prime minister has faced a difficult few months, with Labour losing two parliamentary seats in by-elections, the London mayoralty and many councillors in May’s local elections.

On Monday, he said the UK faced “unique circumstances”, including oil prices trebling and the global credit crunch.

But Mr Brown said the government was “resilient in… dealing with these problems”.

He earlier denied a rift with Mr Darling, who had said the country was facing its worst economic crisis in 60 years.

The Organisation for Economic Cooperation and Development (OECD) has said the UK economy is likely to fall into recession this year – the gloomiest forecast yet from an official organisation.

The Conservatives said the measures announced to help the housing market were “too little, too late”.

Shadow chancellor George Osborne said: “We will look at the details of these measures and we will support those that will work.

“But let’s be clear, they are not going to help the vast majority of families facing a rising cost of living and falling house prices.

“Nor do they amount to the first instalment of the economic recovery plan we were promised.

“I suspect that what we will see in the coming weeks is a desperate and short-term survival plan for the prime minister rather that the long-term economic plan the country needs.”

Liberal Democrat leader Nick Clegg said: “This looks like a hotchpotch of measures thrown together to save Gordon Brown’s political skin.

“The social housing stock could be increased far more easily by allowing local authorities to buy up unsold properties and use them for new social housing.

“Yet again the government is desperately scrabbling around for a way to fix problems of its own making.”

Scotland’s first minister, Alex Salmond, welcomed an end to the uncertainty which he said was causing people to delay house purchases.

The Westminster government was now catching up with what the Scottish government had already done to help the housing market, he added.

Two weeks ago, Mr Salmond announced he was bringing forward £100m worth of housing expenditure to this year rather than in 2010.

News reported by The BBC

David Cameron has attacked the government for a “completely reckless” briefing that stamp duty could be axed temporarily to boost house sales.

“Far from freeing up the housing market, they have actually frozen it,” the Conservative leader told reporters.

He is holding talks later with the National Association of Estate Agents (NAEA) – a body he claims the government has refused to meet.

It comes after Alistair Darling refused to rule out changes to stamp duty.

Estate agents have already warned that uncertainty over the government’s policy on the tax could cause people to delay buying houses.

Leak inquiry?

Speculation was fuelled by a report in last Tuesday’s Sun newspaper that the government planned to offer a holiday from stamp duty payments to revive the flagging sector.

When tackled about the story on Wednesday’s Today programme, the chancellor said a “number of measures” were being considered – but the government had come to no conclusions.

The Treasury later issued a statement saying: “Recent news stories suggesting the government has put forward a proposal on stamp duty are simply wrong. These stories are based on speculation.”

“Their decision to brief out the possibility of a stamp duty holiday was completely reckless” David Cameron Conservative leader

According to some reports, the original briefing came from Downing Street and was aimed at undermining Mr Darling – something firmly denied by Number 10.

Mr Cameron, who has returned to the political frontline, following a holiday in Cornwall, said the debacle showed the government was more interested in “press handling and headlines than what is in the best interests of the country”.

He urged the government to adopt the Conservatives’ plan to abolish stamp duty for nine out of 10 first time buyers.

“When it comes to the crisis in our housing market they seem intent on making things worse rather than better,” he said.

North East tour

“Their decision to brief out the possibility of a stamp duty holiday was completely reckless – far from freeing-up the housing market they’ve actually frozen it.

“Have they even got a leak inquiry to find out how this was briefed out? I think not. I think they know exactly where it came from.”

Mr Cameron, who will tour marginal constituencies in the North West of England before resuming his summer break with a holiday in Turkey next week, is set to meet with housing trusts, city economists, academics and house builders to discuss the property market.

The group will look at the mortgage market, repossessions and the housing supply, he said.

“We won’t be announcing any conclusions today. We won’t be briefing out thoughts today. This is a seminar to look at the issues – it’s to engage with the experts to help us develop our policies.”

‘Unacceptable’ behaviour

He refused to repeat a claim by shadow foreign secretary William Hague that the Conservatives were the “likely winners” of the next general election, stressing that there was no “complacency” in his team.

“I never use those words because the election is up to the members of the public to vote and you can’t make any presumptions about the way they are going to,” he said.

He also condemned the “completely unacceptable” behaviour of Ian Oakley, a Tory general election candidate for Watford, who admitted a campaign of harassment against his Lib Dem rivals.

The Liberal Democrats have urged him to investigate the “vile campaign” by Oakley, who quit the party following his arrest.

Oakley, 31, of Ryeland Close, West Drayton, north west London, appeared at St Albans Magistrates Court last week to admit five counts of criminal damage and two of harassment against Liberal Democrats.

He asked for 68 other offences to be taken into account. He is due to be sentenced in September.

Miliband praise

The monthly briefing comes as ex-local government minister Nick Raynsford accused Labour of being in a “deep hole” and warned that attempts to “buy” support would only invite contempt.

Writing on newstatesman.com, Mr Raynsford accused the government of a “frantic search” for vote-winning ideas.

He failed to mention Gordon Brown, but praised the call by Foreign Secretary David Miliband to “start winning the argument over our record”.

Mr Miliband fuelled speculation over the Labour leadership when he penned an article two weeks ago calling on colleagues to have the confidence to make their case afresh – but without making a reference to the prime minister once.

The prime minister, who is on holiday, is expected to launch a fightback in September.

News reported by The BBC

Reports that the government is considering changes to stamp duty are causing confusion and delays in the housing market, the BBC has learned.

Among possible measures to boost the housing market could be allowing buyers to postpone the payment of stamp duty.

But readers of the BBC News website said that the uncertainty had caused problems for their transactions.

The government has denied that any proposals have been put forward at all, saying the stories are speculation.

‘Backfired’

“I don’t want to sign one day only to find that stamp duty has been abolished the next” Chris O’Brien, Homebuyer, Swansea

Treasury denies stamp duty plan

After having his property on the market for several months, Richard Bell was due to exchange contracts on his Windsor home on Friday.

But after reports appeared in the media of a possible stamp duty holiday, his buyer has asked to delay completion until the stamp duty situation is clarified.

He is angry at the way the government has handled the situation.

“Their crumb of comfort has backfired,” Mr Bell told BBC News. “It has stopped the sale in its tracks.”

“They really haven’t thought about the implications,” he said.

‘Killed off’

“What we really need is some clarity” Peter Rollings, Marsh and Parsons Estate Agents

Chris O’Brien from Swansea said he thought the speculation would “kill-off” the housing market until the details of any changes were confirmed.

The stamp duty on the home he is due to exchange contracts on will be more than £8,000.

But he won’t now be signing on the dotted line until the government makes a decision one way or another.

“I don’t want to sign one day only to find that stamp duty has been abolished the next.

“The Chancellor needs to make a swift decision,” he said.

Going ahead

Mark Phillp and his fiance considered delaying their home purchase until the situation was clearer.

They agreed to go ahead, but it was a difficult decision.

“We really didn’t know what to do,” Mr Phillp told BBC News.

“Do we hold off and risk losing the house or go for it and risk losing the £8,000 in stamp duty?”

They are now hoping that any announcement comes in the next fortnight before they exchange contracts.

The Conservatives have written to the Chancellor calling for an end to such uncertainty.

However a Treasury spokesperson insisted that no decisions have been taken on changes to stamp duty.

“Recent news stories suggesting the government has put forward a proposal on stamp duty are simply wrong. These stories are based on speculation,” he said.

‘Clarity’

STAMP DUTY RATES
£0-£125,000: Nil
£125,001-£250,000: 1%
£250,001-£500,000: 3%
Over £500,000: 4%
Rates are different for properties in disadvantaged areas
Source: HMRC

Estate Agents have been echoing the call from homebuyers and politicians for further information.

Peter Rollings, managing director of London-based Marsh and Parsons estate agents, said any further information would be helpful.

He said four househunters who came into one of their West London branches had told him they would hold off putting in any offers while the uncertainty persists.

“What we really need is some clarity,” Mr Rollings said.

He called on the government to at least confirm which price bracket any measures would apply to, in order to prevent the uncertainty infecting the whole market.

What is not clear yet is whether any relaxation of the stamp duty rules would apply just to the 1% band or to the higher rate bands as well.

Currently, people buying properties for between £125,000 and £250,000 pay 1% in stamp duty at the time of sale.

Those spending more than £250,000 pay 3%, while homes costing more than £500,000 incur a 4% rate.

There is a precedent for a suspension as the Conservatives temporarily suspended the tax on homes worth less than £250,000 during the 1991 recession.

News reported by The BBC

The Conservatives have accused the Chancellor of “playing damaging short-term games” with the housing market by indicating possible stamp duty changes.

Some estate agents have told the BBC that purchasers are holding back till they know whether a stamp duty holiday will take effect.

The measure is seen as an incentive for buyers to kickstart the housing market.

The Treasury has said it may form part

of a package of housing measures but insisted no decisions had been taken.

‘Uncertainty’

What is not clear yet is whether it might apply just to the 1% band, which applies to properties valued between £125,000 and £250,000, or to the higher rate bands as well.

Estate agents welcome any move to lift the stamp duty burden.

“The rumours of a stamp duty holiday have created a “wait and see” mentality from potential buyers” Graham Lock, estate agent

But some have told the BBC that prospective purchasers are reluctant to go ahead until policy on stamp duty is clarified.

And that in itself could cause short-term damage to the market.

“The rumours of a stamp duty holiday have created a “wait and see” mentality from potential buyers which in turn is hurting the market even more,” said Graham Lock, who runs online estate agency housenetwork.co.uk.

Some buyers had already indicated they were pulling out of deals, he added.

No decisions

Trevor Kent, former president of the National Association of Estate Agents, said that instead of launching a lifeboat Chancellor Alistair Darling had pulled the plug on what was left of the market by inept indecision.

For the Conservatives, shadow Treasury spokesman Philip Hammond has written to the chancellor calling for an end to the uncertainty and accused the government of deliberately undermining the market.

A Treasury spokesman said the suggestion that any announcement on stamp duty had been made was simply wrong.

As the chancellor had made consistently clear, he said, no decisions have been taken.

News reported by The BBC