Budget 2009: Darling to offer £1bn housing rescue
Stamp Duty is expected to be kept at its £175,000 threshold until the end of the year in tomorrow's Budget.
A further £1 billion rescue package for the housing market is also expected to be launched -focusing on increasing the stock of social housing, as well as stimulating the construction sector and helping to complete abandoned building projects.
In the pre-Budget report issued in November, Mr Darling indicated a £20 billion spending plan for the economy, of which £1 billion would be designated for the housing sector.
Furthermore the chancellor is expected to announce a £50 billion guarantee of mortgage lending to aid first-time buyers.
The stamp duty threshold - at which the lowest rates of one per cent is paid - was increased from £125,000 to £175,000 in September last year for just 12 months.
The chancellor, however, is now expected to extend this for further.
But many commentators are calling for the threshold to be increased higher further, for a complete stamp duty holiday, or a complete revamp of the whole system.
Graham Beale, Nationwide chief executive, said: "We have long called for a reform of stamp duty and we believe increasing the nil rate threshold to £250,000, and linking it to inflation going forward, will stimulate the housing market and help reduce the burden that stamp duty places on first-time buyers in particular.
"The time is now right for reform, as the current low level of housing market transactions means such changes would have a lesser impact on tax revenues than at the height of the market."
Gillian Charlesworth, director of external affairs, at the Royal Institution of Chartered Surveyors, explained the stamp duty holiday will only work with mortgage lenders are encouraged to expand lending.
"Crucially, the end of the holiday needs to be well managed to avoid further volatility in the housing market.
"Our preferred option would be to reform stamp duty from the current slab structure to a marginal system like income tax. Without such changes to the tax, the end of the holiday has the potential to undermine the tentative improvement in activity in the housing market."
She also explained measures to boost the construction industry such an increase in council house building, restarting stalled projects and buying homes that cannot be sold will help.
"Without steps such as these, skilled workers will be lost from the industry and current problems will be made more severe."
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