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Property sector calls for targeted stamp duty cuts

Agents and other property professionals have, perhaps unsurprisingly, reacted positively to rumours of a Stamp Duty cut.

Prime Minister Liz Truss and Chancellor Kwasi Kwarteng are reported to be planning to include a reduction in Stamp Duty in the mini-Budget to be unveiled on Friday.

The news has already sparked concern among buyers and sellers already in property chains, with some questioning on social media if they should delay completion until an announcement is made.


It comes as HMRC data yesterday showed property sales continued to increase during August.

There are no further details as of yet on whether the cut would be permanent or temporary and who it would apply to.
Agents may fondly remember the busy period of the Stamp Duty holiday during the pandemic, although some critics now blame that for driving up prices and the shortage of stock the market now faces.

Some agents are instead suggesting that any Stamp Duty cut should be targeted rather than being implemented across all types of buyers and price brackets.

Lucian Cook, head of residential research at Savills, said the Government may be hoping that a cut will offset the impact of increases to the cost of living and more expensive mortgage pricing.

He said: “In an ideal world, we would have liked to have seen the Government take the opportunity to look at how changes to Stamp Duty could address specific issues in the housing market.

“Firstly, they should consider a targeted relief for downsizers - perhaps similar in scale and design to that available to first time buyers - in order to remove one of the barriers to more efficient use of our existing housing stock. 

“Secondly, they should look at lower rates of Stamp Duty on the purchase of more energy efficient homes, particularly as housing remains the problem child of reducing our carbon emissions. That would further encourage existing homeowners to undertake improvement works before the point of sale.”

The National Association of Property Buyers, which has long called for a reduction in Stamp Duty rates, agreed that it should be targeted.

Its spokesman Jonathan Rolande suggested the zero-rate threshold for first-time buyers should be increased from £300,000 to £350,000 and said pensioners should get support to downsize, adding: “Although fuel bills have now been capped at a more affordable level, there are still many pensioners living in large family homes that will find them increasingly hard to maintain and keep warm. 

“To encourage them to sell, freeing up much-needed bedroom spaces in family homes, I’d like to see targeted Stamp Duty relief for retired people trading down market, say from a 4 bedroom detached to a 2 bed property. 

“Where the number of bedrooms is being reduced, Stamp Duty could be zero on the smaller purchase saving £7500 on a £350,000 purchase. Additionally, rates should be reduced in areas that require regeneration, encouraging investment exactly where it’s needed the most.

“A healthy property market is key to a successful economy. I hope that we will not see blanket tax cuts that will further fuel the market that, even cooled in the last few months, is still red-hot.”

There are warnings that a cut could increase house prices in the short-term.

Tom Bill, Head of UK Residential Research at Knight Frank, said: “Nobody can accuse the new Government of lacking an economic vision. If its low-tax approach extends to Stamp Duty, recent history tells us it will trigger higher levels of demand in the housing market at a time when mortgages are getting more expensive, which will support social mobility. 

“Prices could spike higher in the short term if supply initially struggles to keep up but more balanced conditions will return provided the cut is immediate and permanent.”


Rightmove data shows that 60% of properties listed on the portal are currently in the £250,001 to £925,000 Stamp Duty price bracket, with 26% in the £125,001 to £250,000 range.


The average stamp duty that a home-mover, not a first-time buyer, pays is currently £8,258, based on an average asking price of £365,173, Rightmove said.

Its figures show 7% of homes on the market are currently exempt from the property tax as they are listed for below £125,000, while 45% are below £300,000, so first-time buyers wouldn’t have to pay the charge.

Rightmove’s analysis suggests that If the stamp duty cut was on all properties up to £500,000, it would mean 74% of properties in England would be exempt from stamp duty.

Tim Bannister, property expert for Rightmove, said: “With demand starting to soften slightly over the past few months, and headwinds anticipated to grow as 2022 draws to a close and we enter 2023, any help to reduce the cost of moving will no doubt be welcomed by buyers if a Stamp Duty cut is announced on Friday.

“Sellers who may have been considering listing their property for sale may be encouraged to push on with their plans given the potential for increased demand, in turn bringing much needed stock to a currently supply constrained market. 

“If the cuts benefit homes in higher price brackets it would help those trading up more than it would help first-time buyers. With rising interest rates and cost of living it could be welcome to those looking for a bit more buffer to find the home they want, but if prices rise further then then that extra money could quickly be swallowed up.

“The impact on supply, demand and ultimately prices will depend on the detail, including if it will it extend to second-home buyers and investors.”

Conveyancers may also be less excited by the prospect of increased caseloads to add to the already high backlog.

Andy Sommerville, director at property data and insight firm Search Acumen, said: “While many buyers who might have given up on homeownership will be buoyed by a Stamp Duty cut, we need to be careful that stimulating demand, unchecked by measures to boost housing stock, doesn’t create an affordability crisis of runaway house prices, immediately following one of the most incredible periods of price growth in modern history.”

Sommerville warned that buyers also need to be aware that Stamp Duty savings now could be outweighed by higher mortgage costs in the future depending how high interest rates go.

He added: “For conveyancers, a Stamp Duty cut cements a new normal for the sector and, if this policy is revealed on Friday, caseloads will continue to remain high by historic standards; more likely than not, they will get larger as buyers look to take advantage of the relief over the coming months.”

Ben Nicoll, sales manager at Antony Roberts estate agents, added: “A cut would have a positive effect in the short term. It will need to be at least six months long to have any meaningful impact, giving buyers and sellers alike time to get their properties through conveyancing. If it is similar to the last SDLT relief package, it may encourage landlords to continue investing in the market, despite increasing fears about pro-tenant legislation making property as an investment class far less attractive.”  

Nathan Emerson, chief executive of Propertymark, said: “Some buyers and sellers entering the market are feeling the pinch of the cost of living crisis and interest rate rises so a cut to stamp duty will certainly ease affordability. 

“This is really positive as the benefits of keeping consumer confidence in the housing market is tremendous for the wider economy and creates encouraging ripple effects across many industries. 

“It’s positive to see that the new Prime Minister is making steps to underpin the market, another aspect to be considered is the dire need for long term investors who provide good quality rental homes. It's not yet known if the proposals to stamp duty would be in place for those buying additional homes as well."

Meanwhile, provisional HMRC transaction data yesterday showed the number of property sales in the UK rose 9.7% annually during August to 114,440 and were up 4.4% on a monthly non-seasonally adjusted basis.

The seasonally adjusted estimate was 104,980, up 7.6% annually and 1.1% higher on a monthly basis.

HMRC warns that annual comparisons should be treated with some caution as they coincide with two transaction peaks between the Stamp Duty holiday periods of 2021.

Lawrence Bowles, director of research at Savills, said: “This level of activity is in line with an average August for the three years before the pandemic. 

“It brings total transactions so far in 2022 to 814,280, which is still 5.3% more than in a typical pre-pandemic year.
“Indicators from RICS suggest buyer enquiries have been falling for the last four months and mortgage rates have risen rapidly.

“That combination of rising rates and falling demand points to transaction activity slowing over the remainder of 2022.

“News of a Stamp Duty cut suggests the Government will be hoping that it supports demand at a time when lead indicators suggest that it is softening after two bumper years. In doing so, they will have a particular eye on how the prospects for the housing market influence consumer confidence and spending in the economy.

“More specifically they will hope that it will go some way to offsetting the impact of increases in the cost of living and, more pertinently, higher costs of mortgage debt that look set to put pressure on house prices and transaction levels next year.    

“Realistically, it seems unlikely that the Government will be able to implement Stamp Duty changes that completely outweigh these two major concerns for buyers. Certainly, they would have to do much more than simply increase thresholds in line with levels of house price growth seen since we emerged from the first lockdown.”


  • icon

    The current slab stamp duty arrangement is ugly and deeply un-conservative. I hope this lot wash it away with a radical simple "one size fits all" stamp tax. It is an ugly tax and previous Chancellors (all bloomin' Conservatives!) should be ashamed that they attacked their own supporters. I, for one, tore up my Conservative party card due to their ridiculous red tape additions to house selling and letting of properties, when they had promised to reverse years of Labour imposed red tape on our industry.

  • adrian black

    thank the lord - at long last (let's hope) that the government is understanding that transaction taxes inhibit markets, flow and grow - BUT watch out for when the government needs to generate more tax (to repay debt) if interest rates the government needs to pay on new debt raises start to rise faster than growth (it is) - perhaps we will see a usage tax (home tax) after the next election (whichever government is elected)

  • icon

    Remember all the MANY spin offs from a busy market. The taxes raised by all those spin offs may be greater than those raised by this horrendous tax on homes. I will never forgive George Osbourne but at the time of these huge increases in SDLT, it was thought this was to head off Corbyn's proposed ridiculous "mansion tax".

  • Ed Mackenzie Smith

    One of the main reasons for the reduction in supply has been the ever increasing stamp duty rates introduced originally by Labour and then continued under the Conservatives. This meant that the difference between price bands increased forcing people to renovate/extend rather than move - cutting off supply. I clearly remember in the 90's the cost of moving was very reasonable, the difference between what you sold and bought for, made sense. It made more sense than staying put and extending. All the key drivers have choked off supply - planning policies (we all agree more housing is required as long as it's not near me) - low interest rates (providing owners to sit tight and ride out an economic downturn)- the ability to let rather than be forced to sell (again cutting off supply) - and SDLT. (If you break down the cost of moving the bulk of the cost is tax) Any change should be permanent and not temporary; it should be a strategic move not sticking plaster. Consideration should be given to transferring the tax obligation away from the buyer to the seller.

  • icon

    Ed, agree with most of that but the seller more than likely has already paid this tax when he/she bought the property. It should never have been increased to today's ludicrous levels in the first place.

    Matthew Payne

    The problem isn't who pays it, it's how much it is. Ed's right, in the 90s you saw your buyer back selling every 18 months, time and time again as they moved up the ladder, as houses prices and %s were much lower. Most people paid 1% most of the time, even in London before the market took off in the 2000s and then the Treasury decided to cash in.

    If changed to sellers, they would need to build in a concession so people dont pay stamp on the same property twice, otherwise supply would shrink even further let alone loosen up, people would feel rightly aggrieved at double taxation especially in context of todays rates and house prices. Would make for an interesting couple of years as sellers took advantage of 0% stamp though.

    Thought would need to be also given to middle aged/older downsizers in larger properties, who may look at an equity release solution instead or just stay put forever when suddenly faced with a stamp bill of anything from £50-150k when their planned bungalow purchase would have cost them £10k as it stands. The argument they have loads of equity so they can afford it is flawed, they focus on inheritance at this point or being able to retire mortgage free and enjoy life, so they aren't about to just take it on the chin.

    A glass ceiling would be created, the middle market would become a quagmire of open chains and then eventually FTs as going into rented wouldnt be a palatable option for most. Tumbleweed would then follow for quite some time. The only solution is to reduce it for buyers and tax elsewhere in the system and it doesnt have to come from property per se when it is the needed dynamo of the economy when recessions are looming.

  • Lenny White

    Pointless. The market is not on its knees.


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