Stamp duty blow
Two days after Chancellor Alistair Darling's pre-Budget report there is still uproar about his decision not to extend the stamp duty holiday on lower-value homes.
The Chancellor told the House of Commons on Wednesday that the break from stamp duty, under which anyone buying a property for £175,000 or less avoided paying the one per cent tax, would end on 1 January 2010.
It is bad news for first-time buyers as the threshold will go back to £125,000 at the start of next year and could threatened the recovery in the housing industry - according to analysts.
One insider said the Chancellor has obviously mistaken rising house prices as a sign that the residential property industry no longer needs any support. But the truth is that rises do not mark a recovery but reflect a severe constriction in the supply of homes - which is a massive problem for the industry.
The Royal Institute of Chartered Surveyors (RICS) and others have accused Mr Darling of missing an opportunity to overhaul the system of taxing the property market, saying that the stamp duty levy distorts the market.
Simon Rubinsohn, RICS' senior economist said an extension to the holiday should have been followed by a move to a marginal system where higher rates are only paid on the value of a property over the tax threshold. This, he argued, would help remove the distortions caused by the current slab system and enable the property market to operate more effectively in the long term.