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Treasury warned on £6bn stamp duty shortfall

Wednesday, 30 November 2011 2:08 PM

The Treasury could be facing a £6bn shortfall from stamp duty if a forecast upturn in the housing market fails to materialise.

Estimates from the independent Office for Budget Responsibility (OBR) published at the same time as yesterday's autumn statement say home sales will rise by 21 per cent in two years' time and another 16 per cent in 16 per cent. That would mean a big increase in stamp duty.

But that is much more optimistic than market experts expect. Lucian Cook, director of Savills Research, told the Daily Telegraph: "Essentially they have pushed back their forecasts for a strong rebound in transaction numbers by a year, but are still being incredibly optimistic given the continued constraints on mortgage lending and the weak outlook for economic recovery."

He added that the OBR was predicting 1.1 million more transactions over the next five years than Savills. "According to my maths that means that our forecast for stamp duty receipts could be £5.9bn lower then theirs over the same period."

The OBR also estimates that the government's new build indemnity scheme which will guarantee mortgages for up to 100,000 households will translate into around 30,000 more property transactions than would otherwise have taken place.

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