Will the stamp duty cut invigorate the property market?

The recent stamp duty break introduced by the government was supposed to get more budding first-time buyers into the market, but not everyone believes it is actually working.

The British Property Federation (BPF) says it believes the problems faced by first-time buyers cannot be solved by freezing stamp duty.

"'The affordability of properties isn't determined by how much they cost or how much you can shave off stamp duty, it's by how well you can get your hands on finance," says the BPF's spokesman Andrew Teacher.

"So if you can't get hold of a mortgage, if you can't raise the deposit you need to get that mortgage, then the property is still unaffordable whether stamp duty is 1% or 5%."
Two year freeze

Stamp duty is a tax which is calculated as a percentage of how much the property is bought for.

Before the change last month, a first-time buyer, like all others, would have paid 1% in stamp duty on a property worth up to £250,000.

But from now until 25 March 2012, they will not have to pay the tax on properties up to that value.
The move is meant to encourage more new buyers to take that first step onto the housing ladder.

Industry experts like Melanie Bien from Savills Private Finance think it is working.

"I think already it's having a huge impact on the number of first-time buyers coming into the market, just looking at what is around at the moment," she says.

"It's a really nice bonus for someone who already has a deposit and can afford the mortgage.
"It saves up to £2,500, which they can spend on anything really - home improvements, the move or new furniture," she adds.

Source (BBC News)