Tax break for London home buyers
A tax break worth up to £1,500 for home-buyers will help revive London's flagging property market, professionals said today.
From Friday, anyone buying in a "deprived" neighbourhood will no longer pay stamp duty if the property costs less than £150,000.
After Gordon Brown announced the move in his Pre-Budget Report yesterday, officials released a list of the 2,000 local government wards which qualify. The tax is levied at one per cent on properties above £60,000, so savings will range from £600 to £1,500. In imposing the cap, the Chancellor broke his promise made a year ago that all buyers in deprived areas would benefit.
The U-turn came after the Evening Standard pointed out that the biggest beneficiaries of an uncapped scheme would be buyers of million pound-plus properties in areas like Islington and Docklands. Labour MPs called for a rethink, saying the cash should go to those most in need.
Confusion caused by the cap means officials are still trying to work out how to extend the benefit to firms spending more than £150,000 on commercial properties, without helping wealthy house-buyers.
The tax break arrives as London house prices have slowed to a standstill in the wake of the 11 September attacks, amid talk of recession.
Royal Institute of Chartered Surveyors spokesman Jeremy Leaf said the biggest boost would come in up-and-coming areas like King's Cross which have concentrations of council estates and small private flats. However, he added: "You create a two-tier market with this sort of blunt instrument."Mr Leaf said the stamp duty move would have less impact than the recent series of interest rate cuts.
Michael Osborne, of east London estate agents Hamilton Fox, said the tax break could increase the flow of young City workers into boroughs like Hackney and Tower Hamlets. He said: "It's a great boost for first-time buyers."
Twenty-five of London's 32 boroughs will benefit in part from the tax break, as will parts of Brighton, Maidstone, Ashford, Hastings, Dover, Luton, Colchester, King's Lynn, Reading and Oxford. Labour's industrial heartlands will gain little benefit because house prices are so low. Properties under £60,000 are already exempt from stamp duty.
London areas included in the scheme are: Barking & Dagenham (14 wards), Bexley (Thamesmead East), Brent (eight wards), Bromley (Anerley, Penge), Camden (12 wards), Croydon (Fieldway, New Addington), Ealing (four wards), Enfield (seven wards), Greenwich (19 wards), Hackney (whole borough), Hammersmith & Fulham (five wards), Haringey (14 wards), Havering (Hilldene), Hounslow (Hanworth), Islington (18 wards), Kensington & Chelsea (Golborne, St Charles, Avondale), Lambeth (13 wards), Lewisham (12 wards), Newham (24 wards), Redbridge (Loxford), Southwark (18 wards), Tower Hamlets (all except Grove), Waltham Forest (seven wards), Wandsworth (Latchmere, Roehampton), Westminster (four wards). A full list of wards is on the Inland Revenue website.
