‘Biggest package of tax cuts in generations’ includes Stamp Duty cut

The Chancellor of the Exchequer, Kwasi Kwarteng, has announced his Growth Plan for tackling rising energy costs to bring down inflation, including a change to Stamp Duty.

The nil rate band will be doubled from £125,000 to £250,000. The Chancellor says this cut means 200,000 more people every year will be able to buy a home without having to pay any Stamp Duty.

The Chancellor comments within the HM Treasury announcement: “Economic growth isn’t some academic term with no connection to the real world. It means more jobs, higher pay and more money to fund public services, like schools and the NHS.

“This will not happen overnight but the tax cuts and reforms I’ve announced today – the biggest package in generations – send a clear signal that growth is our priority.

“Cuts to Stamp Duty will get the housing market moving and support first-time buyers to put down roots. New Investment Zones will bring business investment and release land for new homes in communities across the country. And we’re accelerating new road, rail and energy projects by removing restrictions that have slowed down progress for too long.

“We want businesses to invest in the UK, we want the brightest and the best to work here and we want better living standards for everyone.”

Paresh Raja, CEO, Market Financial Solutions: “One of Whitehall’s worst kept secrets this week, the confirmation of the Stamp Duty cut, is nonetheless significant. Like Johnson and Sunak’s actions during the pandemic, today’s mini budget underlines the new-look Government’s determination to maintain a buoyant property market.

“But the true impact of this move remains to be seen. One common theme of the Stamp Duty holiday in 2020-21 was that sellers inflated asking prices to account for buyers’ Stamp Duty savings. Will we see the same again? It is likely, to an extent at least. But this time around we have rising interest rates impacting the amount buyers can borrow, so that will also shape the way that house prices move.

“I think more action should have been taken to incentivise developers, investors and homeowners to improve properties’ sustainability. Buyers and renters want greener homes, while the energy price crisis has demonstrated the need to improve how energy efficient buildings are. So, further financial incentives to encourage owners to lower the carbon footprint of their property would have made perfect sense at this time. We should expect this to be a recurring theme in the months to come.”

Iain Crawford, CEO of Alliance Fund, comments: “Today’s Stamp Duty cut is great news for homebuyers and will act as a shot in the arm for the UK property market, putting any fears of an impending market slowdown to rest. 

“We’ve already seen just how beneficial a Stamp Duty tax incentive can be in fuelling buyer demand and not only will home sellers benefit from this heightened market activity, but it should also entice the nation’s housebuilders to pick up the pace where the delivery of new homes is concerned.”

Jatin Ondhia, CEO of Shojin, comments: “The property market is undoubtedly integral to the UK economy, and its value extends far beyond SDLT tax receipts for the Government, given what it means for developers, investors, agents and service providers. Once again, as turbulence has struck, the Government has reacted quickly to support the market, just as they did with the Covid-19 Stamp Duty holiday.

“It will be interesting to see what impact this has from an investment perspective. For instance, we have seen retail investors deterred from buy-to-let purchases due to higher tax bills, but will this SDLT cut offer enough incentive to reverse that trend? I am not sure – the complexity and high cost of traditional property investment continues to alienate many, so we could see more people go down alternate routes, like fractional investing in real estate.”

James Forrester, Managing Director of Barrows and Forrester, comments: “Yet another reheated housing policy by the government and little more than a smoke screen, allowing them to take the easy way out instead of making any meaningful headway tackling the housing crisis. 

“Of course, the government can hang its hat on a buoyant housing market as ‘proof’ of economic success and so keeping house prices artificially inflated by fuelling demand is their only concern. 

“Unfortunately for those already struggling to purchase their own home, the meagre saving made via a Stamp Duty cut will soon be absorbed by this higher cost of homeownership.”