The government is heading for a big shortfall in stamp duty - making plans to suspend it may be less financially painful than expected.
Mortgage lenders have responded to the chancellor's suggestion that stamp duty for homebuyers could soon be suspended.
Speaking to the BBC yesterday, Alistair Darling repeatedly refused to rule out the scrapping of the tax - which would provide a stimulus to the slowing housing market by making buying a home cheaper. He added that he "want[ed] to look at a range of options" that would "help people" who wanted to buy a home.
The Council of Mortgage Lenders (CML), responding, claimed that the move might represent less of a financial hit for the government, which collects revenues from stamp duty, than might be thought. According to previous research from the body, a "shortfall" in revenue from the tax is likely to be declared by the government later this year, with figures well down on 2007's stamp duty income of £7 billion.
This is because mortgage activity has slowed dramatically over recent months, with banks recently saying that overall loan approval levels stand at less than half those of a year ago. As stamp duty is only levied when homes are bought and sold, overall revenue from the tax has therefore taken a direct hit.
"Given that the Treasury is set to forego substantial revenue from residential stamp duty, we believe that the case for reforming stamp duty is compelling," the CML added.
"While addressing funding shortage remains critical to underpinning the housing market, the government should not lose sight of the fact that it also has an opportunity to reform stamp duty, and in a way that can support home ownership and first-time buyers."
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