The Chancellor has slashed Stamp Duty for home buyers providing a much-needed boost for property sales. But although the move was welcomed as a stimulus to the market, it received a mixed response from some property industry insiders.
The cut, effective in England and Northern Ireland comes into force today and raises the threshold of how much a property has to cost before Stamp Duty is paid to £250,000. This rises to £425,000 for first time buyers.
‘And we’re going to increase the value of property on which first time buyers can claim relief, from £500,000 to £625,000,’ said new Chancellor Kwasi Kwarteng.
He added that his measures would take 200,000 people out of paying Stamp Duty altogether.
Craig Vile, Managing Director of online valuations specialists, The ValPal Network, said: “We work with over 4000 estate agents throughout the UK and they will welcome this move with open arms. It is bound to give the housing market a shot in the arm at a time when interest rates are rising and there has been some talk of a downturn.”
And Maxim Cohen, founder and CEO of UK Adviser said the new measures will come as a relief to people buying for the first time to counterbalance the interest rate rises.
“There could have been a slowdown,” he said.
“Keeping the UK market buoyant is important to the UK economy as a whole. Interest rate rises are here and may well continue so it’s vital the Government takes action to make things easier for buyers. These things go hand in hand.”
Government could have gone further
And although cautiously welcoming the move, co-founder and CEO of Gazeal, Bryan Mansell wanted the Government to go further.
“I would have liked to have seen a total reform of Stamp Duty. Currently it’s a tax solely on buyers. That needs to change.
‘But this is great for the first time buyer. They are the engine room of the marketplace but it’s possible that this could lead to a short-term increase in prices. What we really need is to stimulate the number of transactions by having lower price growth. This feels like a bit of a knee-jerk response to the interest rate rises.”
Although this will be a boost for many home buyers, Mr Kwarteng’s tax cutting measures contained little joy for the hard-pressed rental sector.
“The Chancellor’s tax cuts will take time to put money into the pockets of renters,” said Neil Cobbold, Managing Director PayProp, an automated rental payment provider.
“However, as the cost of living crisis has been driven mostly by high energy prices, we welcome the cap on prices as we head towards winter which will be a relief to tenants and landlords.”
Release of building land is welcome
The Chancellor confirmed that a £60 billion package to halt energy prices would come from increased Government borrowing and also announced £45 billion of tax cuts.
“Stamp Duty cuts across the board may help simulate the sales market, but it could tempt more landlords to sell up which could reduce the supply of rental properties in the short term, further driving up rents. And encouraging landlords to give good tenants a right of first refusal on any rental sale could help reduce demand for rental properties in line with supply,” said Cobbold.
The Chancellor also set out plans for the release of surplus Government land for development – including house building.
Daniel Evans, Chair of the Association of Independent Inventory Clerks said: “I think from a property market perspective, I would give this a cautious welcome. The release of additional land has been sorely needed for a long time and the Stamp Duty reduction will increase transaction levels.”
Leave a Comment