Stamp duty cut ‘will spur missing movers to come to market’
Nearly nine in 10 people getting on or moving up the property ladder where stamp duty applies will not need to pay the tax at all while a temporary holiday applies.
From July 15 until March 31 2021, buyers will pay no stamp duty on the first £500,000 of their purchase when they move home.
The measure, which temporarily increases the “nil rate” band of stamp duty from £125,000 to £500,000, will reduce the average stamp duty bill for a main home from £4,500 to zero. Buyers can potentially save up to £15,000.
Property experts said the step could encourage some “missing movers” back to the market.
But it was also suggested that some sellers may now be tempted to put their asking prices up due to the tax savings that buyers will be making.
Announcing the move, Chancellor Rishi Sunak said: “Nearly nine out of 10 people buying a main home this year will pay no stamp duty at all.”
Stamp duty applies in England and Northern Ireland and people usually pay the tax on homes priced above £125,000. Some stamp duty discounts were already in place for first-time buyers.
There are already signs that the stamp duty holiday is helping to reboot the property market.
In the first half hour after the announcement was made on Wednesday, traffic to property website Rightmove jumped by 22%.
The previous day, as speculation mounted about the announcement, Rightmove had a record 7.7 million visits.
Rightmove’s property expert Miles Shipside said: “Lockdown prevented 175,000 would-be sellers from coming to market so we hope this stamp duty holiday will provide the spur for those missing movers to come to market.
“They will find there’s currently record demand for their properties from prospective buyers, with Rightmove inquiries to agents now double what they were before lockdown.
“Home movers will be grateful that the changes come into effect straight away so they don’t have to delay their plans, and what we could see now is people rushing to get a price agreed before some sellers put their prices up in the hope people will be able to pay more because of the tax savings.”
Mark Hayward, chief executive, NAEA (National Association of Estate Agents) Propertymark, said: “These measures will enable people looking to buy a home to have the confidence and stability to be able to move forward with their purchase, which in turn will have a knock on effect on the wider economy as people buy white goods and furniture.”
Nick Leeming, chairman of Jackson-Stops, said: “There should be a flurry of fresh buyers entering the market imminently, with the hope of completing their transactions before the tax break comes to an end.”
He added: “Upsizers across the country are set to gain the most from this stamp duty holiday, with savings of nearly £15,000 made available to those purchasing at the top end of this newly-created stamp duty bracket.
“This is additional cash for a deposit, allowing these buyers to own more of their property from the start or indeed make a move sooner than they had originally planned.”
Purplebricks UK managing director Allan Warren said: “This is great news for buyers and sellers… We’ve already seen an increase in valuation requests since the story emerged this week.”
The announcement was also welcomed by lenders. The choice of mortgages generally has shrunk significantly during the coronavirus crisis. Mortgage deals for borrowers with smaller deposits have been particularly thin on the ground.
Eric Leenders, managing director of personal finance at trade association UK Finance, said: “This measure designed to reboot the housing market builds on the wide package of support put in place by mortgage lenders, working with the regulator and HM Treasury, to help customers through these tough times.”
Michelle Andrews, HSBC UK’s head of buying a home, said: “We have been working hard during this time to remain open for business for purchase and remortgage customers, continuing to provide mortgages at higher LTVs (loans-to-value), addressing and overcoming backlogs in physical valuations caused by lockdown and providing mortgage payment holidays to help customers tackle the financial impact of Covid-19.
“The housing market is multi-faceted and needs everyone pulling in the same direction to help the economy and I believe this stamp duty pause is a very positive step in keeping the housing market moving.”