Chancellor Rishi Sunak is expected to unveil a “mini-budget” on Wednesday, in which he will propose a stamp duty holiday, similar to that proposed by former chancellor Philip Hammond in 2017.
The move is expected to increase the stamp duty threshold from an initial £125,000 to a maximum of £500,000 during the “holiday” period aimed at kick-starting Britain’s economic recovery.
The Treasury’s current plans affect England and Northern Ireland and currently impose an average stamp duty of 2% on homes priced between £125,000 and £250,000, and an average of 2% stamp duty on properties priced between £250,000 and £925,000. Pays 5% stamp duty.
Peter Gettins, from mortgage broker L&C Mortgages, said first-time buyers could expect to save up to £10,000 under the new scheme on a property worth £500,000. A mover who buys a property at the ONS UK average price of £248,000 can expect to save £2,460, while a mover who buys a second property for the same price can expect to save £9,900.
This system is scheduled to go into effect in the fall in response to the impact of the coronavirus, which has caused real estate prices to fall for the first time in eight years. One issue to raise is that stamp duty is usually the most generous for first-time homebuyers, so the holidays won’t be of much benefit to them. Perhaps today’s move should be seen as an effort to increase liquidity in the real estate market rather than home ownership.
While this serves the obvious purpose of promoting economic activity, it actually makes it more difficult for first-time buyers to get onto the ladder, as it makes it disproportionately easier for speculators to add to their portfolios. Possibly.
Commenting on the announcement, Mary-Ann Bowling, Managing Director of Ringley, said:
“The stamp duty holiday will undoubtedly trigger a rush of transactions and help breathe life into a housing market that has been deeply frozen in the fight against coronavirus.
“When it comes to rebuilding the UK housing market, the government should consider long-term solutions, not just short-term band-aids.
“Millions of Brits were already in a rental agreement and that number was expected to rise anyway, with or without coronavirus. The disruption caused by the coronavirus has caused rentals to decline as banks squeeze potential buyers with stricter lending limits and people put off buying or selling homes. Demand is likely to increase.
“Removing additional stamp duty for buy-to-let investors will stimulate the supply of rental housing, as well as encourage broader activity in the housing market. It will be a source of funding and support the rebuilding of the UK.”
