In a speech today entitled “Plan for Jobs” by the Chancellor of the Exchequer Rishi Sunak, he announced the elimination of the Stamp Duty at a certain threshold in a move to improve the UK housing market. The Chancellor explained:
“… to catalyse the housing market and boost confidence, I have decided today to cut stamp duty. Right now, there is no stamp duty on transactions below £125,000. Today, I am increasing the threshold to half a million pounds. This will be a temporary cut running until 31st March next year. And, as is always the case, these changes to stamp duty will take effect immediately. The average stamp duty bill will fall by £4,500. And nearly nine out of ten people buying a main home this year, will pay no stamp duty at all.”
This policy adjustment is part of a broader plan to boost economic activity during the COVID-19 crisis. The Chancellor noted that property transactions fell by 50% in May and house prices have fallen for the first time in eight years. He said this is a market the UK needs to be thriving.
Assetz Capital, a Fintech that has lent over £1 billion to UK SMEs as well as housebuilders, claims to have funded around 1 in every 100 new homes last year. Stuart Law, CEO and founder of Assetz Capital, shared the following statement:
“We welcome the changes outlined today by the Chancellor – there’s no doubt this will have a positive impact on the market and help to partly make up for the larger deposits now required by buyers. As the first link in the housing chain, first-time buyers are the foundation of the whole housing market so we support any changes that benefit this group. The government could, and should, go further however, taking a pragmatic view that this change alone isn’t going to fully balance the negative impact of the virus on the housing market. We’d also advocate all of the recent buy-to-let taxes being removed for the next five years, as buy-to-let investors could potentially step in where first-time buyers can’t and support the bottom of many housing chains and prevent them failing. This means the 3% extra stamp duty on buy-to-let purchases should be removed as well and the removing the mortgage interest tax also recently introduced. At a time when we will now doubtless see greater rental demand from virus-delayed first-time buyers, more rental property will help keep rents down. This would give first-time buyers a chance to save more towards the new larger mortgage deposits required. It’s in the government’s interest to attract buy-to-let investors to help replace demand from first-time buyers in order to protect the housing market as a whole and help keep rents down for the time being too.”