A permanent cut in stamp duty with immediate effect
Chancellor Kwasi Kwarteng has today announced the point at which Stamp Duty is charged on property sales will increase from £125,000 to £250,000 for home movers with immediate effect.
The threshold for first-time buyers will increase from £300,000 to £425,000 and can be used on purchases worth up to £625,000.
Commenting on the cut in stamp duty for the second time in just two years, and this time permanently, Russell Griffin, co-director of Samuel Wood Estate Agent in Shropshire and Midlands Regional Executive on the Propertymark board said:
"The first stamp duty holiday which was extended to a full year during and after the Covid pandemic certainly helped to not only keep the housing market moving but also caused a 'maxi boom.'
"I think I can speak for most estate agents when I say that we really had no idea how the pandemic would affect the housing market, but few predicted the frenzied market which developed, which was in no doubt helped by the cut in stamp duty land tax (SDLT) on residential properties of up to £500k. The market became fast-paced, with many homes going for over the asking price and bidding wars driving up average house prices all over the country and many people moving out of the cities to the Shires.
"Following the end of the cut in SDLT which was extended on properties of up to £250k until the end of September 2021, the market has steadily slowed and the unprecedented price hikes have cooled. For the last six months at least, we have experienced what we called a 'chicken and egg scenario,' with people not knowing whether to put their house on the market with limited stock to choose from to move to.
"It has also caused huge issues for the rental market, as many landlords sold up to take advantage of the higher property prices and the fact that buyers wouldn't need to fork out the stamp duty to buy. This has meant a severe lack of rental properties and tens and tens of renters and families applying for the same properties.
"The Telegraph quite rightly reported that there is a current housing crisis and we echo their sentiments and welcome the news that Liz Truss has made this decision in the mini-budget today.
"When the housing market keeps moving, it contributes enormously to the economy and is closely linked to consumer spending so is an important move to keep us out of or reduce the impact of recession. As the Bank of England puts it, when house prices go up, homeowners become better off and feel more confident. Some people will borrow more against the value of their home, either to spend on goods and services, renovate their house, supplement their pension, or pay off other debt.
"These are once again, unprecedented times, which call from some big gestures and measures, and this one is one which we at Samuel Wood support."
****This week, our co-director Russell Griffin, was also invited onto the Jim Hawkins BBC Radio Shropshire show to discuss the cut in stamp duty and how it will affect first-time buyers, house movers and the market as a whole.
Russell has decades of property experience so was able to provide his professional point of view both as an experienced estate agent and in his capacity as the Midlands Regional Executive on the Propertymark board.
It's well worth a listen and you can listen to the full interview here by scrolling to 2.37.
Photo by Jordhan Madec on Unsplash.