As we saw in the summer of 2020 during the Covid-19 pandemic, the raising of the Stamp Duty threshold can have a very positive impact on activity in the property market.
Two years ago, the move to cut duty encouraged the resumption of homebuying in what was a difficult and challenging period.
The Stamp Duty ‘holiday’ prompted many more sales and transactions than there might otherwise have been.
Fast forward to now and a new Chancellor has announced a similar move in what is also a highly uncertain time in the economy characterised by the highest inflation rate in decades and emergency government intervention to combat rising energy costs.
The measures in his mini-Budget as regards Stamp Duty were:
- Raising the threshold of how much a property has to cost before Stamp Duty is payable. This figure has gone up from £125,000 to £250,000.
- Helping first-time buyers. They will now pay no Stamp Duty on the first £425,000 of property value, a rise from £300,000.
- Raising the value of property on which first-time buyers can claim relief, from £500,000 to £625,000.
Kwasi Karteng has said he believes these measures will collectively take 200,000 people out of the need to pay Stamp Duty altogether.
While in the past, Stamp Duty ‘holidays’ can lead to property prices going up because of the growth in demand they encourage, we believe big rises are unlikely on this occasion.
That is because rising interest rates, including their impact on variable rate mortgages, will act as a restraint on affordability along with the other cost of living pressures people are facing.
However, we welcome the new Stamp Duty measures nonetheless as a means of maintaining market confidence and growth.
For more information, we highlight a range of essential indicators about the local property scene on our website that you might find useful.