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Should Stamp Duty Put You Off?

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As any first-time buyer will know, getting onto the property ladder is a daunting prospect. Despite the dip in property prices witnessed in the last two years, house prices are still historically very high as a percentage of average earnings. Furthermore the continuing lack of mortgage finance for those without large deposits means that there are many who cannot take advantage of the ultra-low rates of interest, where they are being offered by banks and building societies. 2009 witnessed a net rise in property prices of over 5%, well above the rise in most people's pay packets in a year which saw deflation for the first time in 15 years as many were laid off or faced enforced pay cuts. The reinstatement of the £125,000 Stamp Duty Land Tax lower limit, which had previously been raised by the government to £175,000 in order to stimulate the foundering property market, has received a great deal of press attention and this no doubt will have an effect on some, with the potential extra thousand or two it brings to bear on the cost of a house within the bracket pushing over the edge the ability of some to purchase. It is, however, undoubtedly true that things are looking up despite the Stamp Duty Land Tax increase. After all, if the property market was still in the doldrums there is the argument that the government would not have reintroduced the lower limit, no matter how desperate they were for the tax revenue. Recent data from the Halifax suggests that 39% of local authority areas are now officially affordable to someone with average UK earnings (meaning that a house can be purchased on a mortgage by a person on such earnings). Although this still appears low at first glance, this represents a significant shift from the figure at the height of the boom, which was a shocking 6%. Provided an individual first time buyer has a regular, reasonably safe job, paying at least an average wage, if such a thing exists, the chances of being able to buy in 2010 are very hopeful, and if house prices retain their present upwards surge, as current lack of supply would indicate, first time buyers might kick themselves for letting what is a comparatively small rise in Stamp Duty Land Tax put them off buying now. •The above is not legal advice; it is intended to provide information of general interest about current legal issues.

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