Chancellor’s plans to help the housing market
Chancellor and Yorkshire MP Rishi Sunak lived up to expectations this week when he announced that he was raising the Stamp Duty threshold on residential property from £125,000, to £500,000 with immediate effect.
The increase will run until March 31 2021 and means that nine out of 10 homebuyers will pay no Stamp Duty, which costs buyers an average £4,500 per home.
The chancellor hopes this will boost sales, prop up house prices and support house builders.
He said property transitions had dropped by 50 per cent and house prices had fallen for the first time in eight years while uncertainty abounded in the market.
The reason for the Stamp Duty holiday for those buying a home for £500,000 or under was, he said, to provide a catalyst to boost confidence in the housing market.
“I want people feeling confident to buy, sell, move and improve as that will stimulate growth and create jobs,” he said.
The chancellor also announced a Green Homes Grant aimed at making properties more energy efficient and cheaper to run while cutting carbon emissions.
The grants will be available from September this year as a voucher. They will fund two thirds of the cost of the work needed up to a maximum of £5,000. Low income households will be entitled to a £10,000 voucher.
The chancellor said: “We expect this to make 650,000 homes more energy efficient and this should save households an average of £300 per year in bills.”
Another motivation for introducing the grant scheme is to provide employment and the Treasury believes it will support 140,000 jobs.
Glynis Frew, chief executive of York-based Hunters Property, said: “This is excellent news during a challenging time for the market and should help to kickstart activity. Without doubt it will help first-time buyers and we must look after them as they are vital to the market.”
Tim Hyatt, Head of Residential at Knight Frank, said “Moving house has a clear multiplier effect for the wider economy, different sized businesses in all areas feel the knock-on benefit.
“The announcement will act as a shot in the arm for UK housing. However, in order for a fully functioning market to return, the availability of higher loan to value mortgages must also be improved to support first-time buyers across the country.”
Patrick McCutcheon, head of residential at Dacre, Son & Hartley estate agents, said: “The property market has enjoyed good momentum since our return from lockdown at the end of May, with good activity across the majority of price sectors. But with looming job cuts and a clear and present risk to the economy the incentive of a stamp duty cut is very welcome and should keep the present momentum rolling.”
Will Linley, chief executive of Linley and Simpson estate and letting agents, added: “For those contemplating moving house or taking the first step on the property ladder, now’s the time to do it. With many lenders having stopped providing 90 per cent mortgages, the savings will certainly benefit those struggling to find a deposit.”
However, there were some dissenting voices, including that of James Allen, director of Walker Crips Property Income. He said: “Tax take will obviously fall and, at the end of the holiday, transactions are likely to slow significantly again, risking price