Freeze on stamp duty 'would not kick-start economy'

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Indy Politics

Calls for home-buyers to benefit from a cut in stamp duty to revive the flagging housing market may be rejected by the Government.

Alistair Darling, the Chancellor, is said to be "not yet persuaded" that cutting or delaying the payments is the best way to kickstart the market. He believes the priority is to make it easier for people to obtain mortgages and the Treasury is talking to lenders about extending a Bank of England guarantee scheme.

"It is not necessarily the best use of resources," one government source said, adding that "shared ownership" schemes, under which people buy part of their home, with the rest owned by a housing association or local authority to whom they pay a small rent, might be better.

Labour MPs are dismayed by the Government's refusal to cut the cost of buying a home and, fearing a return to the negative equity of the 1990s if no action is taken, are to appeal to Gordon Brown to overrule Mr Darling.

A widespread expectation of a stamp duty cut or "holiday" has led many people to delay house purchases – the average buyer could save between £5,000 and £9,000. Estate agents and surveyors say that this has already paralysed the market.

The Local Government Association said proposals for a selective "part buy, part rent" scheme were a "step in the right direction" but councils should decide how the money is spent. Its spokesman, Paul Bettison, said: "Anything that allows town halls to keep hard-working families in their homes during tough times will be hugely beneficial."