The temporary cut on Stamp Duty for homes up to £500,000, announced by Chancellor Rishi Sunak today, has been welcomed by the housing sector, as a positive move for getting the market moving.
The Nil Rate Band of Residential SDLT (Stamp Duty) is to increase from £125,000 to £500,000 until 31 March 2021 – one of a package of measures announced as part of the Chancellor’s Plan for Jobs.
“We welcome the Chancellor’s stamp duty holiday, which makes shared ownership homes an even more attractive option for people looking to own their own home,” said Kush Rawal, director of residential investment at Metropolitan Thames Valley Housing.
“Removing stamp duty from almost all initial share purchases means that key workers will be able to buy a shared ownership home with as little as two months of rent as their deposit.”
Strengthen the housing market
The announcement will help to strengthen the housing market, said Paul Stockwell, chief commercial officer at Gatehouse Bank “The property market has rebounded since re-opening in May, but uncertainty surrounding house prices means many buyers have been tentative about committing,” he added.
“The stamp duty cut on homes up to £500,000 will be a valuable incentive to encourage more buyers to buy or move home, especially in property areas like London and the South East where stamp duty costs are high.”
Home movers have been less active than first-time buyers in the past year, but the trend may reverse as owners look to make significant savings, he said.
Encouraging more first-time buyers
Kevin Shaw, managing director of residential sales at Leaders Romans Group said: “The post-lockdown property market is looking stronger than initial forecasts suggested, and this initiative will continue to drive its recovery and boost the upward curve that the market now finds itself on. It will also help to alleviate any lingering fears over how the market may fare this year due to the pandemic.”
“This ‘holiday’ should also go some way to help stimulate the market for younger people, which should be a real priority for the Government – it should be doing all it can to help younger generations get onto the property ladder. Not having to pay stamp duty may encourage more first-time buyers to purchase homes, especially in regions where the threshold is relatively low to the cost of housing.”
Stamp Duty rates for homes over £500,000
While the announcement is welcome news to developers of smaller residential units, it won’t help movement at the top end of the market, said Will Scoular, head of private client lending at at Investec.
“Today’s announcement from the chancellor is good news for developers of smaller residential units as it will help persuade nervous buyers back into the market,” he said. “However, we must be cautious that the removal of the support in March next year could cause transaction volumes to stall again, creating somewhat of a delay in the impact of the crisis unless permanent reform is introduced. Meanwhile, unchanged Stamp Duty rates for homes worth more than £500,000 will continue to put the brakes on transactions and reduce the overall tax take.”