Stamp Duty Holiday Abolition to Affect Property Market Recovery – RICS

World’s leading body for standards in property, land, and construction – the Royal Institution of Chartered Surveyors (RICS) – recently expressed its concern over the possible consequences of stamp duty holiday abolition at the end of December 2009.
In the opinion of RICS experts, the housing market in problematic areas of the United Kingdom that are already suffering from house price declines might collapse once the temporary stamp duty holiday is over. These areas, that are already lagging behind the remaining parts of the UK in terms of property market recovery, might be seriously affected by the exemption of the stamp duty holiday, which, let us remind, is valid for properties worth £125,000-£175,000.
RICS’ surveyors in many regions, such as the West and the East Midlands, Wales, and Scotland, are all determined that market activity will fall almost to zero once the stamp duty holiday is over at the end of this year. The point is that the vast majority of properties located in the above-mentioned areas fall into the £125,000-£175,000 price range.
On the other hand, the negative effects of stamp duty abolition in certain regions might not be as evident as they could be since house prices in Wales and the East Midlands have already been falling for some time, according to RICS’ surveyors. As for the West Midlands, a mere 3% of surveyors reported house price rises rather than falls.
RICS economist, Mr. Rubinsohn said that the increase in the cost of property transactions might defer many potential buyers, especially first-time buyers, from making property purchases, which fact definitely poses a threat to market recovery in certain regions of the UK.
Being influenced by its own forecast, the Royal Institution of Chartered Surveyors urged the British Government to revise the stamp duty tax and to introduce a new taxation system.