Slay­ing the beast of stamp duty will fi­nally un­clog the hous­ing mar­ket

The Daily Telegraph - Business - - Summer Statement: Focus On Business & Economics - LAU­REN DAVIDSON

Cal­looh! Cal­lay! For Chan­cel­lor Rishi Su­nak has fi­nally slain that manx­ome foe, stamp duty. Or, at the very least, dulled its eyes of flame. For prop­er­ties pur­chased un­til March 31, the thresh­old at which stamp duty is payable has been in­creased from £125,000 to £500,000, sav­ing buy­ers up to £15,000.

Above this thresh­old, stamp duty will be charged at the nor­mal rates of 5pc on the value of the prop­erty be­tween £500,001 and £925,000, 10pc on the band be­tween this and £1.5m, and 12pc on any­thing higher.

The new rates will help home movers across the spec­trum, and should rein­vig­o­rate a prop­erty mar­ket that has be­come stuck in the mud. A change to the dreaded, puni­tive tax has long been nec­es­sary. Op­po­nents say it clogs up the mar­ket by stop­ping peo­ple mov­ing to take up new jobs, pre­vent­ing grow­ing fam­i­lies from buy­ing larger homes and keep­ing older cou­ples in houses that are too big for them.

Re­duc­ing the stamp duty bill means peo­ple will be more likely to move when they want or need to – in­creas­ing the num­ber of trans­ac­tions and free­ing up hous­ing sup­ply for first-time buy­ers.

This stim­u­lus is des­per­ately needed: res­i­den­tial prop­erty trans­ac­tions in May were half the num­ber recorded in the same month last year.

Aca­demic re­search has shown that a one per­cent­age point re­duc­tion in stamp duty could boost prop­erty trans­ac­tions by 20pc. Mar­ket data has delivered the same re­sult.

Af­ter first-time buy­ers were freed from stamp duty in 2017 – with a full ex­emp­tion up to £300,000 and 5pc payable up to £500,000 – they over­took the num­ber of ex­ist­ing home­own­ers mov­ing house for the first time since 1995. The Chan­cel­lor has now gone one bet­ter by of­fer­ing the ex­emp­tion to all buy­ers, be­cause there is lit­tle point giv­ing one group of buy­ers a leg up when the mar­ket de­pends on all be­ing able to move along the lad­der. Could his changes have gone fur­ther? Al­ways.

First-time buy­ers, who pre­vi­ously had a mo­nop­oly on tax breaks un­der £500,000, will now face stiffer com­pe­ti­tion from wealth­ier down­siz­ers and buy-to-let land­lords who will not face the same mort­gage re­stric­tions from lenders.

Su­nak stopped short of de­liv­er­ing on Boris John­son’s de­sire to lower the top rate from 12pc to 7pc – mean­ing sec­ond step­pers buy­ing larger fam­ily homes will still pay high rates of 10pc and 12pc above £925,000.

Down­siz­ers who wish to take ad­van­tage of the hol­i­day may be un­able to plan and un­der­take such a large life mile­stone by the end of March.

But the change means nine out of 10 buy­ers will no longer pay stamp duty – and for those who will, a sav­ing of £15,000 is not to be sniffed at. O frab­jous day, in­deed.

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