“Back in 1993 first-time buyers benefited from a more realistic levels of stamp duty,” said Williamson, “as well as mortgage tax relief. These days it is much more costly - the Chancellor has missed the chance to redress the balance.”
According to Nationwide over 60% of first-time buyers currently pay stamp duty at the starting level of £60,000 but when that level was introduced in 1993, the average house price in the UK was just £51,000. Today it stands at nearly £120,000.
Ed Williams, managing director of Rightmove, the property website, voiced a similar view and added: “ We estimate that the Chancellor netted an extra £438 million in 2002 thanks to his hikes in stamp duty, plus the effect of rising house prices and higher volumes of transactions - total revenue from the tax in 2002/03 was £3.7 billion. If the housing market were to follow the same trends in 2003/04, the government would raise £5.5 billion this year - a 49% increase in one year. Interest rates remain low and there's plenty of choice of houses at competitive prices on the market. But the Chancellor's decision not to raise the £60,000 threshold means that almost every first-time buyer will now be paying stamp duty - and that won't help a slowing housing market."
The stamp duty issue as it affects Shari’ah compliant mortgages was long anticipated and will be welcomed by the Islamic community and lenders wishing to enter that market. However the double payment of stamp duty for Islamic homebuyers is the headline problem. Much work and creative thinking still needs to be undertaken to ensure that Shari’ah compliant arrangements can be offered on competitive terms by UK lenders.