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Stamp duty reform stamped out

The Chancellor took no action on stamp duty in his pre-budget speech yesterday, dashing hopes of first-time buyers struggling to get a foot onto the property ladder.

The revenue the Chancellor has taken from residential stamp duty has more than trebled over last 4 years to £3.6 billion in 2002/03 and nearly 20% of this has been paid by first-time buyers.

Housing market watchers and mortgage suppliers had wanted the Chancellor to reorganise stamp duty to help first time buyers afford the spiralling cost of homes.

The news comes as a Treasury report released yesterday said that in 2001 first-time buyers paid £18 million more than if houses had risen in line with European countries, with each buyer paying an extra £32,000.

The main reason behind the high cost of UK housing was poor supply of new homes said the report, which put part of the blame for shortage on house builders who had not been acting in society's best interests and deliberately operated a policy of 'trickle-out' on new developments to maximise profits.

Chancellor Brown did at least promise to consult on how best to increase the supply of social housing. He also promised to introduce real-estate investment trusts as a way to increase funding for housing.

Tax specialists say the trusts will allow injection of diversity into the property investment portfolios of private investors who have been restricted in the scope of their property investment.