Readers of this blog will have seen my doubts on Tuesday (here and here) about the real size of the stamp duty holiday. This morning we confirmed that it’s probably more like £240m than the £615m claimed by the government.
There are only two possible explanations for this that I can see.
1] Treasury officials were so idiotic that they expected 2m housing transactions in a year. (There were fewer than 300,000 in the first six months of 2008).
2] Gordon Brown wanted the current exemption lifted to £250,000 – not the £175,000 announced on Tuesday. And in the confusion surrounding the announcement of the housing package (the PM and Chancellor were still debating changes to mortgage interest support late on Monday night) someone forgot to change the number.
I’d go for the latter.
The maths is really simply. Half of all deals in the 12 months to early 2008 fell within the £125-250k bracket. If there were 700,000 transactions this year (which is what the CML expects) there would be about 350,000 deals in the £125-250k bracket…….raising how much stamp duty?……..wait for it….it really is uncanny…..£600m.
ps: I should hat-tip “Mark” for suggesting this on this blog yesterday.
Jim Pickard
Kiran Stacey
