POLITICS

Budget 2014: George Osborne Mulls Stamp Duty Tax Credits To Boost Housing

18/03/2014 11:27 GMT | Updated 18/03/2014 11:59 GMT
Christopher Furlong via Getty Images
GLASGOW, UNITED KINGDOM - FEBRUARY 28: For Sale boards advertise property for sale on February 28, 2005 in Glasgow, Scotland. The Liberal Democrats have unveiled their plans for the economy, pledging to raise the stamp duty threshold from GBP60,000 to GBP150,000 to help first-time buyers and increase tax for people earning more than GBP100,000. (Photo by Christopher Furlong/Getty Images)

George Osborne is considering a potential stamp duty tax credits scheme in a bid to unblock the "current log jam" in the supply of new housing.

Haart, the UK's largest independent estate agent, has urged the chancellor to allow sellers in tomorrow's Budget to deduct the value of stamp duty paid by their buyer from the stamp duty they pay on their next home.

"Stamp duty is an unjustified burden on middle income families, especially in London and the southeast. It is also preventing the proper functioning of the housing market, exacerbating the shortage of housing supply," said Paul Smith, a manager at Haart.

"We are proposing a workable solution which would transform stamp duty from the tax on transactions that it currently is, with all the economic inefficiency this suggests, into a fairer tax based on the incremental increase in the value by which buyers are stepping up in the market. With each buyer in a chain now paying stamp duty, the exchequer is getting many bites from the same cherry – this cannot be justified."

Osborne is also believed to be about to double the stamp duty threshold from £125,000 to £250,000 in order to further help the housing market.

House-building continues to fall far short of ever-growing demand, with the government's National Housing and Planning Advice Unit warning that the UK needs 290,500 new homes a year until 2031 to keep pace.

The number of new homes registered with the National House Building Council (NHBC) hit 133,670, a 28% increase on the year before and the most since 2007.

George Osborne has signalled that he would "build for Britain" in this year's Budget and unveiled plans to build a garden city in Ebbsfleet on the Thames Estuary, which would bring 15,000 homes.

The chancellor is expected to unveil a raft of other measures to boost the housing market, including the extension of the Help to Buy equity loan scheme to 2020.

See also: Budget 2014: What Can We Expect From George Osborne?