Stamp duty concession 'regionally divisive'

First-time buyers were given an incentive to take the housing plunge - and vote Labour - when the threshold at which stamp duty becomes payable was doubled to £120,000.

First-time buyers were given an incentive to take the housing plunge - and vote Labour - when the threshold at which stamp duty becomes payable was doubled to £120,000.

The Chancellor said the move would help more young people to own their own homes. The number of first-time buyers entering the housing market has fallen by a third in the past two years.

But critics branded the announcement, which will cost the Exchequer £250m, "regionally divisive" for favouring prospective buyers in the North and West. Although 300,000 buyers stand to gain from the tax break, buyers in London will benefit the least, since just 5 per cent of properties for sale in the capital cost less than £120,000. In the North-east, two-thirds of properties sold last year would have escaped the duty, which took effect at midnight last night.

Peter Williams, deputy director of the Council of Mortgage Lenders, said: "Its effect will be muted in southern England where affordability is worst. The starting threshold would be over £150,000 if it had been index-linked since Labour came into office."

Liam Bailey, head of residential research at Knight Frank, the estate agency, said: "With average UK house prices standing at above £150,000, the Chancellor has missed an opportunity to help all first-time buyers throughout the UK no matter where they live."

To pay for the tax break, Gordon Brown abolished stamp duty relief on commercial property in deprived areas - three years after introducing it. This is expected to save him some £340m. He introduced the relief to encourage firms to set up business in 2,000 poorer areas. But the move backfired because it meant expensive buildings in areas such as Canary Wharf and Holborn became exempt.

Kevin Griffin, head of Ernst & Young's stamp duty group, said: "This potentially embarrassing climbdown has been forced on the Chancellor by the risk that, taken with other reliefs and assistance available, it would breach the EU limit on permissible state aid."

Despite average UK property prices more than doubling in the past six years, the stamp duty threshold has been frozen since 1993.

The Chancellor also unveiled plans to boost low-cost home ownership via an initiative with the CML. The sector's trade body wants to extend a scheme which uses public money to provide equity loans for key workers. Under the proposals, the number of people who would benefit from the equity loan scheme would double to 20,000, thanks to an injection of private money as well.

On the anticipated subject of real estate investment trusts - a low-cost, tax-efficientway for people to invest in commercial or residential property - there was the promise of a Treasury discussion paper ahead of their introduction in 2006.

Liz Peace, the chief executive of the British Property Federation, said: "The Government has said it is committed to the introduction of Reits and is aiming for legislation in the Finance Bill 2006. There's a nice feeling throughout this of letting the market decide."

Susan Sarandon described David Bowie as
peopleSusan Sarandon reveals more on her David Bowie romance
sportDidier Drogba returns to Chelsea on one-year deal
Arts and Entertainment
The Secret Cinema performance of Back to the Future has been cancelled again
Arts and Entertainment
Christian Grey cradles Ana in the Fifty Shades of Grey film
filmFifty Shades of Grey trailer provokes moral outrage in US
BBC broadcaster and presenter Evan Davis, who will be taking over from Jeremy Paxman on Newsnight
peopleForget Paxman - what will Evan Davis be like on Newsnight?
Louis van Gaal would have been impressed with Darren Fletcher’s performance against LA Galaxy during Manchester United’s 7-0 victory
The new dawn heralded by George Osborne has yet to rise
voicesJames Moore: As the Tories rub their hands together, the average voter will be asking why they're not getting a piece of the action
Dejan Lovren celebrates scoring for Southampton although the goal was later credited to Adam Lallana
newsComedy club forced to apologise as maggots eating a dead pigeon fall out of air-conditioning
Arts and Entertainment
Jo Brand says she's mellowed a lot
tvJo Brand says shows encourage people to laugh at the vulnerable
Life and Style
People may feel that they're procrastinating by watching TV in the evening
Rhys Williams
commonwealth games
Isis fighters travel in a vehicle as they take part in a military parade along the streets of Syria's northern Raqqa province
Arts and Entertainment
Southern charm: Nicolas Cage and Tye Sheridan in ‘Joe’
filmReview: Actor delivers astonishing performance in low budget drama
Life and Style
fashionLatex dresses hit the catwalk to raise awareness for HIV and Aids
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Senior Risk Manager - Banking - London - £650

    £600 - £650 per day: Orgtel: Conduct Risk Liaison Manager - Banking - London -...

    The benefits of being in Recruitment at SThree...

    £18000 - £23000 per annum + Comission: SThree: SThree, International Recruitme...

    Test Analyst - UAT - Credit Risk

    £280 - £300 per day + competitive: Orgtel: Test Analyst, Edinburgh, Credit Ris...

    Trainee Recruitment Consultants - Banking & Finance

    £20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

    Day In a Page

    Evan Davis: The BBC’s wolf in sheep’s clothing to take over at Newsnight

    The BBC’s wolf in sheep’s clothing

    What will Evan Davis be like on Newsnight?
    Finding the names for America’s shame: What happens to the immigrants crossing the US-Mexico border without documents who never make it past the Arizona desert?

    Finding the names for America’s shame

    The immigrants crossing the US-Mexico border without documents who never make it past the Arizona desert
    Inside a church for Born Again Christians: Speaking to God in a Manchester multiplex

    Inside a church for Born Again Christians

    As Britain's Anglican church struggles to establish its modern identity, one branch of Christianity is booming
    Backhanders, bribery and abuses of power have soared in China as economy surges

    Bribery and abuses of power soar in China

    The bribery is fuelled by the surge in China's economy but the rules of corruption are subtle and unspoken, finds Evan Osnos, as he learns the dark arts from a master
    Commonwealth Games 2014: Highland terriers stole the show at the opening ceremony

    Highland terriers steal the show at opening ceremony

    Gillian Orr explores why a dog loved by film stars and presidents is finally having its day
    German art world rocked as artists use renowned fat sculpture to distil schnapps

    Brewing the fat from artwork angers widow of sculptor

    Part of Joseph Beuys' 1982 sculpture 'Fettecke' used to distil schnapps
    BBC's The Secret History of Our Streets reveals a fascinating window into Britain's past

    BBC takes viewers back down memory lane

    The Secret History of Our Streets, which returns with three films looking at Scottish streets, is the inverse of Benefits Street - delivering warmth instead of cynicism
    Joe, film review: Nicolas Cage delivers an astonishing performance in low budget drama

    Nicolas Cage shines in low-budget drama Joe

    Cage plays an ex-con in David Gordon Green's independent drama, which has been adapted from a novel by Larry Brown
    How to make your own gourmet ice lollies, granitas, slushy cocktails and frozen yoghurt

    Make your own ice lollies and frozen yoghurt

    Think outside the cool box for this summer's tempting frozen treats
    Ford Fiesta is UK's most popular car of all-time, with sales topping 4.1 million since 1976

    Fiesta is UK's most popular car of all-time

    Sales have topped 4.1 million since 1976. To celebrate this milestone, four Independent writers recall their Fiestas with pride
    10 best reed diffusers

    Heaven scent: 10 best reed diffusers

    Keep your rooms smelling summery and fresh with one of these subtle but distinctive home fragrances that’ll last you months
    Commonwealth Games 2014: Female boxers set to compete for first time

    Female boxers set to compete at Commonwealth Games for first time

    There’s no favourites and with no headguards anything could happen
    Five things we’ve learned so far about Manchester United under Louis van Gaal

    Five things we’ve learned so far about United under Van Gaal

    It’s impossible to avoid the impression that the Dutch manager is playing to the gallery a little
    Screwing your way to the top? Good for Lana Del Rey for helping kill that myth

    Screwing your way to the top?

    Good for Lana Del Rey for helping kill that myth, says Grace Dent
    Will the young Britons fighting in Syria be allowed to return home and resume their lives?

    Will Britons fighting in Syria be able to resume their lives?

    Tony Blair's Terrorism Act 2006 has made it an offence to take part in military action abroad with a "political, ideological, religious or racial motive"