Property industry commentators have reacted after a media report said the government would cut stamp duty in an emergency budget on Friday.
The government will announce radical plans to reduce stamp duty in the government’s mini budget tomorrow in a bid to stimulate greater activity in the housing market and boost economic growth.
Such a move would be a major fillip for the housing sector, which has shown signs of cooling this year amid increasing inflation and higher interest rates.
According to The Times, the new prime minister and chancellor have been working on the plans for more than a month and will announce them on Friday.
Liz Truss views a stamp duty reduction as key to boosting the economy by allowing more people to move and allowing first-time buyers to get a foot on the housing ladder.
As usual, the devil will be in the detail.
Jeremy Leaf, north London estate agent, said: “Talk of a possible cut in stamp duty is not altogether surprising when you appreciate what a nice little earner the previous concession proved to be for the government during lockdown.
“Even the relatively modest reduction in transactions is having an impact and the government is all too aware of this. A healthy property market is not just good for the housing industry but for the economy generally because it benefits so many other trades and professions, as well as chiming with the government’s avowed intention to promote growth. Any announcement would need to come into effect sooner rather than later in order to minimise compromising existing transactions.”
Matthew Thompson, head of sales at Chestertons, remarked: “Despite increasing interest rates and the cost of living crisis, August remained a busy month for London’s property market. The number of buyer enquiries alone has risen by 35% compared to August last year. One driving force behind the demand for homes is the return of professionals who are looking for a property closer to work. We are witnessing this at our Canary Wharf and Hyde Park branches in particular but also across some of London’s commuter hotspots such as Islington.
“London’s housing market is underpinned by a chronic shortage of property and an increasing population which has surpassed the nine million mark. To house this amount of people, the capital only has 3.6million dwellings which cannot change by much as there is limited land to build on. The population however will continue to grow and boost demand further.”
Dominic Agace, chief executive of Winkworth, said: “It has to be encouraging that we are talking about growth plans, not austerity. Stamp duty reform would embody this. We know lower tax allows more people to right size for their family needs, particularly in the South-east. As we saw immediately after the pandemic in London, that doesn’t mean prices have to increase. Downsizers are encouraged to make the move so the housing ladder is unblocked. With more movers, it also means the overall government tax take will increase.
“A budget for growth is a vote for optimism. I think that’s a route we all naturally prefer. Sentiment is a key driver in the housing market, which plays a huge role in the UK economy through its ripple effect to all types of businesses.”
Ben Nicoll, sales manager at Antony Roberts estate agents, said: “A stamp duty cut would have a positive effect in the short term. It will need to be at least six months long to have any meaningful impact, giving buyers and sellers alike time to get their properties through conveyancing. If it is similar to the last SDLT relief package, it may encourage landlords to continue investing in the market, despite increasing fears about pro-tenant legislation making property as an investment class far less attractive.”
Jeremy Raj, national head of residential property at Irwin Mitchell, commented: “SDLT is a bad tax that inhibits the market and is excessively complex and unfair. There are not many levers available to the Government right now, but this is a good one to pull. From what we know so far, this is likely to stimulate confidence and activity in the market, both of which are needed in order to help people secure the accommodation that is right for them, and to help prevent further backsliding of the economy. We eagerly await the detail as the industry as a whole was not expecting this and requires certainty as to exactly what is proposed and how it will affect current transactions, as soon as possible.
“Clearly however this is still just a timely intervention during somewhat critical circumstances. The overall position with regard to a terrible lack of housing supply, high energy costs, environmentally poor housing stock and the need for a stable, well-funded planning system remain key issues that it is vital the Government now moves to the top of their agenda.”
David Alexander the chief executive officer of DJ Alexander Scotland, commented: “The expected reduction in Stamp Duty Land Tax (SDLT) expected in Friday’s mini-budget must be replicated in Scotland if there is not be a growing divide between the housing market here and in the rest of the UK. Scots already face much higher taxation when buying a home and any further reduction in the rates in England would only exacerbate what is already an unfair situation.”
“This move by the Westminster government is clearly aimed at stimulating the housing market and encouraging growth at a time when there are signs of a slowdown. If the Scottish government cannot match this commitment, and indeed go further, to reduce the disparity between tax levels then I fear that Scots homeowners will be at a greater disadvantage in the future.”
Nick Sanderson, Audley Group, said: “A stamp duty cut is a tried and tested way to get the housing market moving. But it is a short-term fix for a housing market that has major flaws. If a blanket reduction is announced, it will only succeed in stimulating some parts of the market and ignores the desperate need for more targeted measures. This is where successive governments have fallen short and why the housing market doesn’t function as it should. The blinkered focus on first time buyers largely neglects homeowners considering downsizing or moving into housing with care and this is an area that could have a significant impact on the whole market. Liz Truss and her government have an opportunity to make a mark on the housing market, but it seems it will pass as another opportunity missed.”
The ongoing supply-demand imbalance ‘can only mean one thing for house prices’
Comments (9)
I’m a Former Tory Boy turned Guardian reader…
The remarkable thing about our country is how we all congratulate ourselves on how the values of our properties keeps on going up. This is the triumph of personal self-interest over straight forward common sense. Turning the roofs that we live under into economic investments has been one of the “major successes” of capitalism in the UK. However, without realising it we have all (well nearly all) become indentured slaves to the money men (bankers, financiers and the already wealthy who lend the money out). And then we congratulate ourselves because we cannot see the cage that we are in.
As far as I can see, there are only 3 ways to make money in the UK:
i) Be born wealthy.
ii) Have just one good idea and sell it.
iii) Become a landlord and ride the wave.
(i) and (ii) are very dependent on your parents and/ or luck.
(iii) can be achieved with a bit of graft, a bit of early self sacrifice and a bit of luck. It is therefore within the grasp of a motivated but otherwise normal mortal.
The problem is that the majority of the population either don’t have the education, or the motivation, or the luck to become a landlord.
That means that most of us end up becoming ever poorer because of the system we live in. The disparity between the rich and the poor in the UK is quite scary. And as mentioned above, the cage around us is all but invisible.
Some of you will say “Blame the poor, they should try harder!” But that’s not fair, especially if you’re a hard headed business owner with the mental skills and determination to get ahead. You are one of the very rare few. The variety of human nature means that not everyone can be like you. You should not judge the average man as lacking because they do not measure up to your high standards.
Simply put we need more housing so that general housing is downgraded from a triple A rated investment into something less toxic. This requires a decades long build programme which is not based on profit margins but which is designed around the needs of the population of the UK. It cannot be left to “the market”.
This constant desperate fight to pay an ever greater percentage of average take home pay just to keep a roof over our heads has to stop.
Reducing Stamp Duty (temporarily or otherwise) is not the answer. All that will do is increase the tax burden on the average man over the medium turn just to prop up a broken system that keeps rich people rich. It looks like the average person might benefit too, and temporarily they might, but all it will do in the long term is protect the interests of the mega-wealthy.
Happy Friday everyone!
You forgot one – marry it.
No to SDLT holidays, and No to any further savings for FTBs. Build more houses, and until we have enough to go around, increase the surcharge paid by buyers who are not replacing their home or who are non-domiciled.
A cut on SDLT for downsizers could be a really good thing. It might encourage single people or couples living in largely unoccupied properties to move somewhere that is easier for them to maintain and with smaller energy bills. This would free up more family-size homes for second-steppers, which in turn means more smaller homes are available to FTBs and downsizers. This would really get the market moving, and the increase in the number of transactions could more than make up for any reduction in SDLT from downsizers.
Tinkering at the edges! We need BOLD action. SDLT is only one thing the Govt can do – there is loads more that needs really radical change. We’ve had miserable soft Government for over 30 years. Tomorrow will tell us!
Absolutely. We need to address issues affecting leaseholds (external cladding, the process of enfranchisement, unfair clauses, etc) and the PRS, but the topic of this article is SDLT.
Be careful what you wish for… Let’s hope the government make a permanent change with immediate effect, and don’t introduce another stamp duty ‘holiday’. With such a shortage of conveyancers in the country already, another SDLT holiday incentive will result in a further exodus of conveyancers from the profession, refusing to live through that mania again.
Everyone commentating makes this boring subject too complicated – lets get back to a one rate for all. Why should “rich people” (often who aren’t) pay so much more? Currently, this unfair tax is deeply offensive to higher tax payers and needs adjusting. Even in the mid range bands, stamp duty is counter productive to too many. 1% for all!
It was a leaked government story to judge the public’s reaction. Perhaps a higher starting nil band and probably permanent first time buyer (up to a certain threshold) relief. Enough to encourage more transactions? Not with the ever increasing mortgage interest rates.