Wednesday 12 November 2008

The basics.

Oo! Some utterly amazing news:

The stamp duty one-year holiday was announced by government ministers with great fanfare two months ago. Ministers raised the minimum threshold at which payment is due to properties selling for more than £175,000, up from the previous threshold of £125,000.

It’s changed nothing - judging by data released today by the Council of Mortgage Lenders.

Well, obviously. I for one am a keen supporter of the stamp duty changes, though they don't go nearly far enough: it should be cut to zero for all house sales. But that's because I do not believe that anyone should have to pay the state a few grand for the privilege of buying a house. I see no justification for the state's appropriation of that money. It's the principle of the thing. But I would never suggest that abolishing stamp duty would be any help whatsoever to first-time buyers or to any other house-buyers. It was obvious that it wouldn't, and I've been rather baffled over the last year or so by the well-meaning but clueless campaigners (hello, Kirsty & Phil) who were convinced that it would somehow make houses cheaper.

Look, house prices are dictated by what people are willing to pay for them. When deciding what I am willing to pay, I look at the whole outgoing sum; I don't ignore certain parts of it depending on who they're being paid to — and the vendors, of course, are doing the same when setting their price. So, if I'm willing to pay £100,000 and £5,000 of that is stamp duty, I can buy a house that costs £95,000. Abolish stamp duty, and I can afford a house that costs £100,000 — and, since house prices are based on what buyers are willing to pay, every house on the market at £95,000 immediately goes up in price to £100,000. I end up paying the same amount of money for the same house, but none of it goes to the bloody Government.


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