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Stamp duty threshold to be raised

7 July 2020 | General

Chancellor Rishi Sunak is expected to announce a temporary increase to the stamp duty threshold after news on the subject was leaked to the press.

Currently stamp duty is charged at a rate of 2% between $125,000 and £250,000, as well as 5% between £250,000 and £925,000.

The new threshold could be raised to start from somewhere between £300,000 and £500,000, while this could last six months or a year.

The Chancellor could make an announcement on the subject tomorrow, when he makes an economic statement.

While there’s talk that this could stimulate the housing market, it could also dampen things down if people are left waiting for a stamp duty cut before they buy.

Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “My message to the Chancellor would be: an announcement on relieving the stamp duty burden would be welcome but please either announce that you are changing it one way or another. Please don’t say you are thinking about it or it may be introduced in a few months.

“Otherwise, you will stop the market in its tracks as buyers and sellers wait to see what will happen before making decisions and you will kill off any or much of the growing increase in activity we have seen since lockdown restrictions were eased.”

He added: “At the same time please, I would urge the Chancellor to announce an extension to Help to Buy, the scheme which has helped so many first-time buyers.

“A large number of developments have been stuck due to Covid and so many are crying out for more certainty with the end of year deadline for completion of works fast-approaching.”

First-time buyers are currently exempt from paying the duty on homes under £500,000 in London and £300,000 in the rest of the country.

Some professionals called for other changes to stamp duty.

Mary-Anne Bowring, group managing director at Ringley, said: “Eliminating additional stamp duty for buy-to-let investors would help stimulate the supply of rental homes while also driving wider activity in the housing market.

“Landlords are a crucial source of development finance through off-plan sales and will help support getting Britain building again.”

Tomer Aboody, director of property lender MT Finance, said: “While plans for a stamp duty holiday are a step in the right direction, what has been suggested so far doesn’t go far enough.

“The threshold for higher-end properties – £1m-plus – is still at extraordinarily high levels, which prevent many from selling or buying.

“While giving a stamp duty holiday at entry level, why not also reduce the higher-end stamp duty to previous levels where it was a set amount?

“This would allow, even for a short period, for the market to evolve, and for buyers to move up and down the ladder more easily.

“This, in turn, would stimulate the economy as people move, develop, refurbish, buy furniture – bringing in a lot of business across the board and boosting jobs.”

This post has originally been featured in Property Wire.