In a bid to boost the housing market, Rishi Sunak has affected an immediate cut on stamp duty. This makes up part of a package which is expected to include a six-month “holiday” from the charge on most homes to provide an incentive to boost the market again.
Economists have voiced concerns over the fact that even though the cut will be announced to the house of commons, it may not be implemented for several months which could lead to an immediate stall in sales as buyers wait for the cut so they can save thousands of pounds, although reports are that there will be no delay in the implementation of the cut.
There has been further consideration by treasury officials to increase the stamp duty threshold from the current level of £125,000 to £500,000 to boost demand, but again there are concerns from the property sector that the proposed delay until Autumn will effectively freeze the current housing market.
Analyst for Savills, Lawrence Bowles said: “A stamp duty holiday would be a welcome boost to a market still in the early stages of recovery.
“Buyers are facing a tougher lending environment, with banks demanding higher deposits. Reducing the upfront cost of stamp duty would be a welcome help, especially to young Londoners struggling to save for their deposit, which is always the stumbling block.”
Freeing up more homes
In the midst of the housing shortage crisis, this reform is expected to help to free up more homes by incentivising those who want to downsize or move on to a second home. Bowles went on to say:
“A stamp duty holiday or reduction in the levy would encourage second steppers and downsizers to put their homes up for sale and move on, freeing up housing stock and giving first-time buyers more opportunities to get on the ladder,” says Lawrence Bowles.