The Budget

News is just in on the budget, I have just logged into the Times on line to see their slant on the budget. Rebecca O’Connor reports.

Buyers of homes worth more than £1 million will be hit by a new higher rate of stamp duty of 5 per cent from next year to fund a temporary scrappage of the tax for first-time buyers, the Chancellor said today.

Alistair Darling said he would use extra revenue from sales of the most expensive properties in the country to fund a simultaneous increase in the lowest threshold for stamp duty of 1 per cent from £125,000 to £250,000 for the next two years to help first-time buyers.

Buyers of homes worth more than £500,000 currently pay a rate of 4 per cent.

On a property worth £1 million, the stamp duty bill will rise from £40,000 to £50,000 from April 2011. For a first-time buyer of a home worth just under the new 1 per cent threshold of £250,000, the bill will fall from £2,500 to £0.

However the concession, to be introduced for any purchase completed from tomorrow and before March 25 2012, will only apply to first-time buyers. Home movers who are buying property under the £250,000 threshold will not benefit.

The definition of a first-time buyer will be someone who has never previously bought a property.

The move will be viewed as another tax on bonus earners and cash-rich investors, who have dominated the top end of the housing market for the past year.

The impact of the tax is expected to fall disproportionately on buyers in London and the South East, where 81 per cent of properties worth more than £1 million are concentrated.

Nicholas Leeming, commercial director of Zoopla.co.uk said: “Taxing the rich makes a good headline, but it won’t raise much money for the government’s fiscal black hole.”Only around 3000 homes sold above the £1m mark in the last year.

For a first-time buyer of a home worth just under the new 1 per cent threshold of £250,000, the bill will fall from £2,500 to £0.

The stamp duty holiday on properties worth between £125,000 and £175,000, which ended at the end of December, helped around 260,000 buyers, the Chancellor said.

Housing market experts welcomed the threshold increase, but said it would be of limited use for first-time buyers who are struggling to raise a deposit.

Housebuilders welcomed the move as a boost to the industry, which has struggled to sell homes to first-time buyers for the last two years. Melanie Bien, director of Savills Private Finance, the mortgage broker, said: "'We welcome the doubling of the stamp duty threshold for first-time buyers to £250,000 which should make a significant difference to the majority, who are struggling to get on the housing ladder. But while every little helps, they still need to raise a sizeable deposit to buy their first home. “Greater relief from stamp duty will be a confidence boost to the housing market, helping to ensure the housing recovery does not stall.”