Buyers could save £15,000 on house move

Reigniting housing sector could make second home owners and landlords the unexpected beneficiaries

SECOND home owners and landlords will benefit from a windfall of up to £15,000 as the unexpected winners of Rishi Sunak’s mini-budget.

The Stamp Duty holiday will give a tax cut to homebuyers including those purchasing additional homes, the Treasury said yesterday.

The Chancellor announced that the threshold at which people start to pay the duty will be lifted from £125,000 to £500,000, with immediate effect.

Designed to support the housing market during the coronavirus-induced recession, the temporary measure will be in place until March 31.

Mr Sunak told MPS the average bill for a main residence will fall by £4,500. He said: “Nearly nine out of 10 people buying a main home this year will pay no Stamp Duty at all.”

The measures will cost the Treasury £3.8 billion and cut a maximum of £15,000 off the cost of buying a home.

The saving will be passed on to buyers of second homes and buy-to-lets, who pay an “additional rate” of three percentage points.

By extending the “nil-rated” band, a second home worth £500,000 will attract £15,000 Stamp Duty – down from £30,000.

First time buyers outside London who already pay no duty on the first £300,000 of the price of a home could save up to £10,000 if they buy a property between £300,001 and £500,000. First time buyers in the capital already pay no duty on the first £500,000 of their home’s value. Sources close to Mr

Sunak denied the measure was brought forward, having originally been planned for the autumn Budget, after the plans were leaked.

A Treasury spokesman said it was “absolutely 100 per cent not the case” that the cut was brought forward because of newspaper reports. An inquiry into the leak was reportedly under way.

Tory MPS hailed the cut. Jacob Reesmogg, Leader of the House of Commons, said: “Since the stamp act of 1765, cutting Stamp Duty has always been popular.” Sajid Javid, the former chancellor, said: “People are understandably anxious about unemployment rising. That’s why Rishi Sunak [is] absolutely right to focus on jobs today. The cuts in VAT and Stamp Duty are particularly welcome.”

It is understood the Chancellor brought in the cut to restore property prices to pre-covid-19 levels and to boost jobs in construction and housing.

Boris Johnson has previously said he wants to permanently scrap the duty on all properties under £500,000 and reduce the top rate, which applies to homes costing more than £1.5million, from 12 per cent to seven per cent.

Official documents accompanying Mr Sunak’s statement stated: “It is crucial to ensure medium-term confidence in the property market and maintain the growing momentum since the easing of lockdown. To do this, the Government will temporarily cut Stamp Duty Land Tax for home buyers across England and Northern Ireland until the end of the financial year.”

Shares in housebuilders and estate agents rose after the announcement. Estate agent Savills saw shares move up 3.4 per cent, while house-builder Persimmon’s shares rose 2.4 per cent.

Housing firms said the cut was “hugely welcome”. Matthew Pratt, chief executive at Redrow, said: “The measures will have a much-needed domino effect, also supporting suppliers, subcontractors and consultants to

the house building industry, as well as boosting businesses supplying goods and services related to moving home such as furnishings and white goods.”

Meanwhile, the Institute For Fiscal Studies said that if the economy had not recovered by March 31, this could depress the housing market. Helen

Miller, the institute’s deputy director, said: “Stamp Duty is a damaging tax in normal times and acts to reduce the number of transactions.

“The holiday will boost transactions and provide a stimulus through the additional spending that is associated with moving house.”