Stamp Duty

The Government has been warned that failing to make a firm decision on whether to suspend stamp duty could further harm the UK's fragile housing market.

Uncertainty over a possible "tax holiday" could hit sales, as buyers put off completing in a bid to avoid the charge, according to Peter Bolton King, chief executive of the National Association of Estate Agents (NAEA).

His comments follow reports that Chancellor Alistair Darling was looking at a "range of options" to kick start the faltering mortgage market, including a possible suspension of stamp duty. The tax is payable on homes which cost more than £125,000, with a levy of 1% on properties priced up to £250,000, 3% on houses costing between £250,000 and £500,000 and 4% on homes worth more than £500,000.

Mr King said that a number of concerned members had contacted him to report customers questioning their decision to proceed with a sale until the situation was clear. He added that the NAEA fears Government indecision could distort the UK housing market over the summer.

"It is a real problem trying to advise people what they should do. We just do not know what is going to happen with stamp duty," he said.

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Lisa Shenton from law firm Irwin Mitchell said: "The Government should clarify its position on this issue as soon as possible. While we haven't seen any buyers pull out immediately, it is likely to have an impact on potential buyers' confidence to make an offer. Buyers who are in the course of an ongoing transaction may re-think in light of last week's announcement, but if they pull out now, they run the risk of losing out on costs already incurred and of their seller finding another buyer."