Brown suspends homebuyer tax

British Prime Minister Gordon Brown suspended a homebuyer tax and proposed spending 1 billion pounds sooner than planned to help reverse Britain's worst housing slump in at least 18 years.



The money will be used to help people buy new homes and support those struggling to pay their mortgages. From tomorrow, residential properties worth less than 175,000 pounds will be exempt from stamp duty for a year under plans announced by Chancellor of the Exchequer Alistair Darling.



The measures are part of a package of relief aimed at preventing the economy from tipping into a recession and bolstering the popularity of the ruling Labour Party, which has lagged behind the Conservative Party in polls since October. The economic slowdown has sent the pound to a record low against the euro.



The rescue package will be funded by spending more quickly the 6.5 billion pounds earmarked for social-housing programs over the next three years so that more of it is used in the next 12 months.



The stamp duty move effectively raises the current threshold for paying the tax from 125,000 pounds. As a result, the share of housing transactions exempt from the levy will rise to a half from a third.



The move will cost the Treasury 600 million pounds in foregone revenue over the 12 months.



Darling was quoted in the Guardian August 30 as saying the UK is facing "arguably the worst" economic conditions since World War II. That prompted Brown's spokesman, Michael Ellam, on Monday to deny a rift between the two men.



Interest-free loan



The program would offer help to thousands of first-time buyers earning less than 60,000 pounds a year for up to a third of the value of a newly built property. The interest-free loans, funded by the government and the property developer, will be available for up to five years.



The government will also give money to several thousand households at risk of falling behind with mortgage payments in return for an equity stake in the properties.



Housing associations would be given the money to buy and then rent back properties to those struggling to make payments, or buy or rent a share of the property to help reduce payments. The plans are part of a broader economic package that Brown will unveil by September 8, when the Cabinet meets for the first time following the summer parliamentary recess. Nationwide Building Society said last week that house prices declined 10.5 percent in August from a year earlier, the biggest drop since the final quarter of 1990.



Source: China Daily/Agencies