RICS in stamp duty holiday warning

The Royal Institution of Chartered Surveyors (RICS) has warned the end of the Government's stamp duty holiday could have "detrimental effects" on the housing market in the West Midlands, East Midlands, Wales and Scotland.

The RICS said that the regional housing markets that are already lagging behind the rest of the country in terms of recovery could deteriorate further.

Surveyors in these regions have estimated that there could be a drop in housing activity when the stamp duty exemption on properties costing up to £175,000 returns to £125,000 at the end of this year.

The average property price in these regions falls between the current stamp duty threshold of £175,000 and the previous threshold of £125,000.

The RICS stated that more surveyors in Wales and the East Midlands are still reporting falls in house prices compared with those seeing rises, while in the West Midlands only 3% of surveyors have witnessed price rises.

The figures are in stark contrast to London where a balance of 95% of surveyors said the cost of property was increasing during October.

But overall, the group said the majority of chartered surveyors did not think the end of the stamp duty holiday would have a distorting effect on the market.

Unsurprisingly, those in London and the South East overwhelmingly thought the end of the holiday would not impact on the market, probably because the exemption has had little benefit in these regions as the average house price is well above the temporary £175,000 threshold.

Surveyors in the North, where the average property costs just £116,051, were also less concerned about the impact the end of the exemption would have on activity.

Simon Rubinsohn, RICS chief economist, said: "At the time of its introduction, we did question how great an impact this policy would have and judging by the fact that only surveyors in certain parts of the country are particularly concerned about the ending of the holiday, it could be said that some areas of the UK hardly even noticed the change.

"However, the additional transaction cost is still a worry to many, particularly first-time buyers, and is a threat to the market in the areas of the country that are still seeing a weak price environment."