August 8, 2008
Does Alistair Darling have the Miras touch?
I believe it was Viz’s Profanisaurus which coined the term “the fecal touch” as the opposite of the Midas touch. The expression comes to mind as the Treasury lurches through yet another crisis, this time over whether or not it’s going to change stamp duty to give the gift of negative equity to naive youngsters bring much-needed solace to the housing market.
It’s getting easy to lose track of the litany of screw-ups and volte-faces - from losing discs to U-turning on capital gains tax and non-doms….not forgetting the mother of them all, the £2.7bn compo package for the abolition of the 10p tax rate.
It’s hard not to sympathise with Alistair Darling over the stamp duty issue. After all, chances are that the original leak didn’t come from the Chancellor or his officials in the first place. But he’s now under increasing pressure to explain what he’s going to do.
Last night the head of the National Association of Estate Agents told me the situation was like the 1988 abolition of shared Miras relief, widely regarded as a monumental disaster. Nigel Lawson, then chancellor, made the mistake of saying in his April budget that the tax would be abolished in August. The result: a stampede of people buying homes with siblings, friends and acquaintances to beat the deadline. It stoked up a housing market which was already in bubble territory - prices in London rose 13 per cent in just four months.
Today we have the same thing in reverse; thousands of people who would have bought a home (and already had misgivings about losing money) will now sit on their hands to find out if they’ll get a tax break.
A buyer could wait until the Chancellor makes a clear statement, during which time house prices may slump and then no matter what the Chancellor says the buyer will be quids in because they have saved on the price of the house even if not on stamp duty, or of course they could get the double whammy of lower house prices plus a stamp duty holiday (or whatever may be proposed).
Of course if house prices fall because of this lack of decisiveness by the Chancellor, then it may cause many sellers to withdraw from the market leaving an even larger problem for the future.
Even though the problem may not be the initial fault of the Chancellor, he must act immediately to stop what could be a disastrous collapse of the already beleaguered housing market.
Posted by: Laurence | August 8th, 2008 at 12:40 pm | Report this commentWas there a leak or were there any briefings? He was asked on the Today program whether he was considering it, and refused to say whether he was or not.
Once he’s been asked the question, we’re stuffed either way. Because he’s either forced to refuse to answer, as he did, or he’s forced to rush the decision, making it even more likely we get the wrong one.
In the position he was put, being asked repeatedly if Stamp Duty is being considered, he ahd no option but to say that all options were being considered.
Posted by: Guy Smith | August 8th, 2008 at 1:28 pm | Report this commentWhen will the populace see the truth, we are not ruled by a government they are just the lackies of an irresponsible press. Most of our current problems as a Nation are clearly down to reaction to press comment and speculation.
Posted by: David Mace | August 8th, 2008 at 1:47 pm | Report this commentThe only good thing about this situation is lower house prices for first time buyers. This however still dies not address average salary multiple against the average house price which is still a problem. It does though mean there is more brick for your buck, especially when co-buying. See www.co-buyers.net for more information on shared property ownership.
Posted by: Mark | August 8th, 2008 at 2:21 pm | Report this commentWell, yes I’m rather p*ssed off by all this - I had a sale agreed two weeks ago warning the buyer that I’d pulled should they try to renegotiate later in the process as a matter of principle. The whole stamp duty debate erupts and guess what, my buyer comes back with an offer that’s essentially the agreed price minus the stamp duty. True to my word I duly pulled. That may cost me more, but whether in a booming or crashing market, what is agreed is agreed. The government ought to change this, and force both the buyers and sellers to sign a pre-agreement, with penalties to pull out. Even if it’s only 1 or 2% of the property price, it would avoid a lot of that nonsense that is currently exacerbating the prices down, just as it was on the way up.
Posted by: anon | August 8th, 2008 at 5:25 pm | Report this commentAnother change that is necessary on Stamp duty is to make it progressive. Maybe increase the rates accordingly so no shortfalls occur, but the current system clearly creates pricing inefficiencies around the critical thresholds. (250k and 500k in particular).
As I’m now planning to sell for the olympics, I do hope the Govt (from whichever party) sorts this out.