Stamp Duty "holiday", why do they think it would help?

Jimuth

Romani_Ite_Domum wrote: »

Stamp duty is real money that disappears from the housing market to the government. It neither benefits the buyer or seller.

As much of the “boom” has been caused by very lax lending, the return of normality to lending practices (now called a credit crunch) has meant that FTBs are now priced out of the market.
One of the reasons they are priced out of the market is the amount of deposit that they have to find.

If a purchaser can get a LTV of 85% on a £200K property and no longer has to pay stamp duty, the purchasing power increases by around 6.5 %. If a LTV of 90% was available, removal of stamp duty would increase purchasing power by 10%. This, in theory could provide some liquidity into the housing market.

True, but it doesn't get around the central illogicality of them needing to find 200K to buy a tiny dump that should cost half that amount, and for which they're going to be paying a ridiculous percentage of their take-home on.

Deposits would be even less of a problem if property was cheaper. Anything that stops house prices coming down makes NO sense to me.

Romani_Ite_Domum

Jimuth wrote: »

Anything that stops house prices coming down makes NO sense to me.

Me neither. It does appear to make sense to the goverment however.

They have always wanted a boom in house prices as the economy has been built on it. Of course they will try to save it, I was just trying to answer the question of how they think it would help.