We compile a range of reactions to the government’s decision to permanently cut stamp duty in Friday’s mini-budget.
To summarise the changes, the minimum stamp duty threshold in England and Northern Ireland has been doubled from £125,000 to £250,000.
For first-time buyers meanwhile this is increasing from £300,000 to £425,000, while the maximum value of a property on which first-time buyers’ relief can be claimed will also increase from £500,000 to £625,000.
Businesses and workers could also get further tax reductions in regional “investment zones”, the details of which are still being fleshed out.
Estate agents
Richard Davies, MD of Chestertons, says: “As the nation is facing rising interest rates and a cost of living crisis, we welcome the government’s cut of stamp duty which will enable many house hunters to pursue their property purchase.
“With Help to Buy coming to an end, the tax cut will be of particular importance to first-time buyers who have always been facing challenging market conditions in London. However, despite the overall positive gesture of cutting stamp duty, the saving could trigger house hunters who previously put their property search on hold to resume their activity. If this added demand isn’t met swiftly, the tax cut could boost the existing imbalance of supply and demand which consequently leads to an initial spike in property prices.”
Ben Davidson, director of Davidson Estates, which focuses on properties in Edgbaston, Harborne and the city centre, said: “This news is welcomed. With interest rates increasing, something had to give in order to maintain the momentum in the buyer market. We’ve seen signs of buyer appetite dwindling somewhat so this news is welcome.”
Matt Nicol, managing director of Nicol & Co, whose company has offices in Droitwich, Worcester and Malvern, said: “Anything that helps the housing market is, of course, to be welcomed. However, with the significant increases in rents we’re seeing nationwide, another incentive we would have welcomed would be to support for private investors to help meet the tenant demand.
“The additional property Stamp Duty Land Tax of 3% remains on each threshold, and has the potential to continue to contribute to a shortage of rental properties as investors have been put off by the high ingoing costs.
“With housing clearly important to this new administration, in my view there was an opportunity to create further incentives for private landlords to help meet the demand.
“Obviously, they will benefit to a degree from the 2% saving on purchases between £125,000 and £250,000 but this was perhaps an opportunity to do more.”
Simon Gerrard, Managing Director of Martyn Gerrard Estate Agents and Abbeytown Ltd, said: “It’s all very well cutting Stamp Duty for first-time buyers but for others, the cut doesn’t even address the annual increase to mortgage repayments which follow on from the Bank of England’s recent 0.5% interest rate rise.
James Forrester, Managing Director of Barrows and Forrester, said: “Yet another reheated housing policy by the government and little more than a smoke screen, allowing them to take the easy way out instead of making any meaningful headway tackling the housing crisis.
“Of course, the government can hang its hat on a buoyant housing market as ‘proof’ of economic success and so keeping house prices artificially inflated by fuelling demand is their only concern.
“Unfortunately for those already struggling to purchase their own home, the meagre saving made via a stamp duty cut will soon be absorbed by this higher cost of homeownership.”
Marc von Grundherr, Director of Benham and Reeves, said “Any saving will be warmly welcomed for those looking to climb the property ladder, particularly in the current economic climate.
“But it’s fair to say that today’s cut is a fairly insignificant one and will do little to help homebuyers overcome the huge financial hurdle of purchasing a property in the first place.
“In fact, it’s fair to say that it will only add to the problem by fuelling demand and pushing house prices higher, while the government also maintains a head in the sand approach to housing delivery.”
Colby Short, CEO of GetAgent.co.uk, said: “Positive news for homebuyers, particularly first-time buyers who stand to make a considerable saving when purchasing their first property.
“We can now expect the stamp duty spurred stampede of buyer activity seen during the pandemic to return, albeit at a more measured pace as today’s cut hasn’t come with an expiry date.”
Guy Horne, CEO and Co-founder at HSPG, said: “The doubling of the stamp duty threshold announced by the Chancellor today represents a considerable incentive for homebuyers, around 200,000 of which will now be exempt from stamp duty altogether, and with stamp duty on the price of an average home reduced by up to 80%.
“Despite these measures, the new government must recognise that the UK’s chronic housing crisis goes much deeper than tax affordability. Without a comprehensive planning reform, supply will continue to lag behind demand, especially for new Affordable Housing. Over a million people on the social housing waiting list will struggle to see how anything other than building new homes across the country will benefit their housing needs.”
Nathan Emerson, CEO of Propertymark, said: “The rebalancing of the thresholds for which stamp duty is paid, in particular for first time buyers is long overdue to catch up with house prices which have risen at an extraordinary rate.
“We did hope that stamp duty for downsizers or last time movers would have also been reviewed to release the latter part of the market, which when blocked stops movement further down for second steppers and first-time buyers, causing stagnation as buyers have nothing to move on to.”
Tom Bill, head of UK residential research at Knight Frank, said: “Just when you think housing demand is cooling, along comes another stamp duty cut. Together with other measures designed to boost the economy, a cut will intensify and prolong demand in the housing market. However, what the Chancellor is giving away, the Bank of England will more than take away. Many buyers will find the impact of rising mortgage rates soon eclipses the benefit of a stamp duty cut, which will keep firm downwards pressure on prices next year.
“The cost of a five-year fixed-rate mortgage has almost tripled over the last year and this upwards trajectory will continue. Almost four million first-time buyer mortgages have been issued since 2009, which is a large group of homeowners who don’t know what it’s like when monthly interest payments rise meaningfully. The gravitational forces of higher rates will bring house prices back down to earth irrespective of any stamp duty cut.”
Housebuilders
Stewart Lynes, Chief Executive Officer for Miller Homes, said: “We welcome the Chancellor’s changes to stamp duty today, the increase in threshold in particular for the first time buyers to £425k is significant and I’m sure will benefit many individuals across England looking to get onto the property ladder.
“The strategy introduced is a real shot in the arm for purchasers and particularly first time buyers and demonstrates the Government’s vision to unlock homeownership for a new generation.”
Nick Sanderson, CEO, Audley Group, said: “A stamp duty cut is a tried and tested way to get the housing market moving. But it is a short-term fix for a housing market that has major flaws. The blanket reduction will only succeed in stimulating some parts of the market and ignores the desperate need for more targeted measures and increasing supply in areas of the housing system which are chronically underserved. This is where successive governments have fallen short and why the housing market doesn’t function as it should.
“The blinkered focus on first time buyers largely neglects homeowners considering downsizing or moving into housing with care and this is an area that could have a significant impact on the whole market. Liz Truss and her government have an opportunity to make a mark on the housing market, but it seems it will pass as another opportunity missed.”
Daniel Robinson, CEO of Virgin Land, a site-finding businesses working with housebuilders, said: “Investment zones are the intriguing piece here as stamp duty measures will have little impact when paired with rising interest rates, and it is no secret that demand side measures aren’t the answer.
“A policy of deregulation and liberalisation is absolutely the right one but must be accompanied by the promised infrastructure projects and meaningful planning reform if these zones are to remain viable for developers and investors.”
Asset managers
Sarah Coles, senior personal finance analyst, Hargreaves Lansdown, said: “The stamp duty cut will ease some of the pressure on buyers right now, and will be a nice bonus for people on the verge of completing, who will have accidentally saved thousands of pounds in tax. However, over the medium term it could do more harm than good.
“We can learn something from when stamp duty relief was introduced for first time buyers: it cut the cost of buying by up to 0.5 percentage points, but increased prices by up to 0.7 percentage points – wiping out any cost saving for buyers.
“Higher prices coupled with higher mortgage rates would push properties further out of reach for millions of people, which could in itself end up scuppering sales. The property market is a delicate beast, and tinkering with tax incentives always risks producing a result you weren’t fully expecting.”
Mark Collins, Head of Tax at Handelsbanken Wealth and Asset Management, said: “This will be a welcome reduction in SDLT payable for first time buyers and those buying at the lower end of the property market. For those buying at the higher end of the market a reduction of SDLT of £2,500 is likely to have less of an impact relative to their overall SDLT liability.”
Garry White, Chief Investment Commentator at Charles Stanley, said: “Relaxed planning rules and a cut in stamp duty initially boosted shares in housebuilders including Persimmon, Taylor Wimpey and Bellway. The sector has been lobbying for a simplified planning system for years – and reform plans include promoting the disposal of surplus public sector land as well as a streamlining of planning regulations to make securing planning permission easier. However, these gains evaporated quickly as global investors concluded that the Chancellor’s growth gamble was too risky – and the pound resumed its slide against the dollar.
“Planning reform is essential – the issue in the UK housing market is supply and not demand – the country is structurally short of new housing. However, boosting demand through incentives such as a reduction in stamp duty before reform of the planning system has started may be counterproductive. It may end up boosting house prices in a rising interest rate environment. This is good for current homeowners as the value of their asset rises – but may ultimately make owning a home move further out of reach for many trying to get onto the bottom rung of the housing ladder.”
Mortgage brokers
John Phillips, national operations director at Just Mortgages said: “A permanent change to stamp duty thresholds will be welcome news to house buyers and a relief to the sector who certainly feared the carnage of previous temporary measures.
“Raising the lower end of stamp duty seemed like the most logical option for the new chancellor to hopefully release more first-time buyers and take 200,000 buyers out of paying stamp duty altogether. Whilst the real-world cost of moving does now reduce, it does still raise questions about affordability as house prices only continue to rise.
“There’s also the question of how the market will react. There’s no question conveyancing never fully recovered from previous measures and the property market is still under increased pressure today with transactions taking as long as 22 weeks to complete. Now add in extra volume to changing criteria, longer lead times and short supply and it creates a very challenging environment.
“Whilst plans were announced to liberalise planning rules and create investment zones to encourage development of new homes, it will be interesting to see how long it will be until the property market feels that benefit.
“But even against a backdrop of rising interest rates and a cost-of-living-crisis, our nationwide network of brokers has seen homeowners acting with real urgency to seek advice and explore options before further rate rises or changes in situation. With a change in stamp duty and a tangible drop in the cost to move, it’s only right to expect that urgency to intensify.
“As a result, solid financial advice will remain absolutely vital for homeowners looking to capitalise, first time buyers trying to check affordability and navigate potentially higher property prices and parents exploring equity release to get family members on the ladder.”
Brian Murphy, Head of Lending at Mortgage Advice Bureau, said: “This could turn out to be an excellent time to properly revisit the structure of stamp duty. Numerous governments have tinkered with it, but it tends to push up prices for a short period and then momentum generally mellows. It hasn’t been long since we last had a stamp duty break, and these things tend to generate momentum that causes a flurry of activity followed by a period of slowdown. However, the permanency of today’s announcement may temper a sudden surge of activity and allow some control of the UK property market to be regained.
“Still, the crux of the issue is that any changes in stamp duty will not address the main problem right now: a significant supply shortage.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: “The Chancellor clearly recognises the dangers in terms of reduced revenue from stamp duty, given the recent reduction in housing market activity, and has taken steps to boost the market.
“The stamp duty cut, particularly for first-time buyers, should encourage those at the first rung of the housing ladder to take the plunge, which will be good not just for the market but for job and social mobility across the board, as well as the wider economy.
“It is good news that it is an immediate and permanent reduction which means that existing transactions shouldn’t be unduly delayed and the benefits can be felt as soon as possible.
“We would have liked to have seen extra help not just for first-time buyers but to encourage energy-efficient properties and more investment on cutting energy use.
“The ambition to reduce planning red tape and improve delivery is particularly interesting because if there is one thing we need more than anything it is additional affordable housing to sell and to rent. Nothing is more frustrating than gaining planning permission for suitable schemes and then waiting sometimes more than a year for work to begin as often unnecessary regulation needs dealing with.”
Mortgage lenders
Tomer Aboody, director of property lender MT Finance, said: “This stamp duty relief will bring the buzz back to the housing market by helping first-time buyers get on the ladder, allowing them to offset the higher cost of mortgages with the stamp duty saving.
“The housing market needs that encouragement and push at the entry level, which pushes the confidence further up, bringing more sales to the market and in turn, stabilising values.”
Scott Clay, distribution development manager at Together commented: “As part of the flurry of tax cuts, scrapping stamp duty now has been met with mixed reactions. We of course recently saw a stamp duty cut during the pandemic, but doing this now, at a time of rising borrowing costs and record unaffordability, means it’s happening in a very different environment than in the summer of 2020. The stamp duty cut will reduce the sky-high costs of buying a home, and ultimately provide needed support for first-time buyers and those who are looking to move soon, however whether this goes far enough to tackle the long-term issues within the market isn’t clear. With that said, this move will likely have a tempering effect, helping the housing market weather a slow down.”
Simon Webb, LiveMore Capital managing director – capital markets and finance, said “I expect this to be seen as a budget that attempts to balance inflationary pressures with economic growth objectives, and helps affordability of first time buyers following a period of significant house price appreciation.
“Raising the stamp duty band for first-time buyers is a nod to people trying desperately to get on the housing ladder and it will undoubtedly be a help for those of all ages struggling to afford their first home.
“It will do little to dampen house price inflation but will help to bolster the lower end of the market. The big question is how this will all be paid for.”
Law firms
Nick Chadbourne, CEO of LMS, said: “The stamp duty cut sounds like good news for homebuyers, and it is in the short-term, but in the long-run it may well see affordability worsen.
“The government needs to spend its huge stamp duty income on building more housing if it’s going to tackle the issue around lack of stock and meet its own target of 300,000 new homes being built every year by 2025. Increasing supply would, in turn, bring demand in line with stock to reduce house prices and boost affordability in the long-run.
“The ongoing cost-of-living crisis may see demand soften in the coming months, but this can’t be relied upon if we’re going to stabilise the market.”
Zainab Dakhil, a residential property partner at Cripps, said: “The reduction in stamp duty and increase in thresholds for first time buyers will be very welcomed by those struggling to jump onto the property ladder or those looking to buy but struggling to save due to the increased costs of living and rising interests rates.
“However, whilst it may appear to help the bottom end of the market, it does little to address the lack of supply and as we saw during the SDLT holiday, buyers flooding the market only caused increases in property prices, making it further unlikely that buyers could afford a suitable property.
“It is also a shame in my view that the government has not given concessions to those able to buy more expensive properties. A lot of those have homes to sell so may be encouraged to do so if stamp duty savings applied to them too.”
Jason Towell, real estate partner at Cripps, said: “Developers, stamp duty land tax relief on land bought for commercial or residential development could greatly improve the viability of some development schemes.
Nick Hale, ONP Group CEO, says: “The cut in stamp duty should have a positive effect for first-time buyers and for people more generally, with the nil rate band being lifted to £250,000. This initially appears to be good news, but it could be counterproductive if it actually pushes house prices up further as we have seen previously, mitigating the savings in tax.
“A Stamp Duty change so soon after the last one ending in September 2021 will certainly have sent a ripple through the industry and caused concerns of the last year repeating itself, but the news that thresholds have moved permanently would have been very much welcomed by the conveyancing industry today.
“Stimulating the market with a long-term legislative change will take further pressure off the industry expecting firms to meet deadlines and we can focus and work together to bring our pipelines down.”
Huseyin Huseyin, Partner and Head of Development at law firm Harold Benjamin, said: “A number of recent governments have announced changes to the SDLT system in the past years, particularly where the economy has stalled designed to stimulate demand in the property market. Such changes, most recently during the pandemic, are tried and tested and often have the effect of boosting property prices, increasing buying activity from first time buyers and property investors and likely to increase the Government’s overall SDLT tax take.
“Given SDLT rates are at an historical high it is a welcome change for those currently considering a new property purchaser and help reduce the cost of moving home. With increasing mortgage rates, however, borrowers should carefully consider their finances before making such a large purchase as higher mortgage payments may end up costing more than any SDLT saving.
“What SDLT changes on their own do not address is the lack of good quality properties on the market and by increasing demand may result in even more people pursuing fewer and fewer properties and ever-increasing prices which become more unaffordable.”
Emma McGlinchey, Head of Real Estate at Aaron & Partners, said: “The news that stamp duty land tax (SDLT) is cut will no doubt come as a pleasant surprise for homeowners looking to buy property.
“Before the fiscal event today, the average homeowner was paying about £5,600 in SDLT. Now it is estimated that these measures will reduce that SDLT bill to £2,500 and that 200,000 buyers will be taken out of paying SDLT at all each year.
“The changes today increase the zero-rate tax slice of a property’s price from £125,000 to £250,000. First time buyers purchasing a home for £625,000 or less also benefit from a zero-rate slice of SDLT on the first £425,000 of the price of the home with 5% payable on the rest of the price. These reliefs are up from a qualifying property price of £500,000 with a zero-rate slab of £300,000.
“Cuts of this type generally have a complex impact on the property market – not always for the better. For instance, it could inflate house prices, in turn pricing out first-time buyers. Whilst the loss of revenue for the Treasury may be neutral if activity increases, such measures do not address the supply side issues. Also, the opportunity has not been taken to simplify the rules on SDLT.
“However, the move by the Chancellor will certainly encourage people to think about moving, boost buyer confidence and hopefully invigorate a market that has showed signs of slowing since the last SDLT holiday ended and recent increases in interest rates. Certainty has been given to the market as these are permanent cuts.”
Will Stevens, Head of Financial Planning, Killik & Co, said: “Stamp Duty is one of the UK’s least popular taxes but a significant revenue generator for the Treasury. Today’s announcement will be welcomed by millions who feel they have been trapped in their homes by the additional cost of moving that it represents.
“The chancellor will hope that by removing this barrier, it will encourage more property transactions, increase affordability for first-time buyers, help those looking to downsize, and encourage more people to move for work.
“However, the real acid test will be in the impact on property prices as a whole, with supply still very much constrained.”
Miscellaneous
Polly Neate, Chief Executive of charity Shelter, said: “The real growth this government should be ready for is a growth in homelessness.
“The Chancellor has done nothing to help the 2.5 million private renters who are already behind or constantly struggling to pay their rent.
“Cutting stamp duty won’t protect those at risk of losing their homes, but it will push up house prices.”
Iain Crawford, CEO of Alliance Fund, said: “Today’s stamp duty cut is great news for homebuyers and will act as a shot in the arm for the UK property market, putting any fears of an impending market slowdown to rest.
“We’ve already seen just how beneficial a stamp duty tax incentive can be in fuelling buyer demand and not only will home sellers benefit from this heightened market activity, but it should also entice the nation’s housebuilders to pick up the pace where the delivery of new homes is concerned.”
Chris Hodgkinson, Managing Director of HBB Solutions, said: “Those lucky enough to be in a position to buy a property will, of course, welcome today’s news and the saving being handed down to them.
“However, the reality is that this is just another half baked attempt by the government to stimulate property prices and maintain the illusion of a buoyant housing market.
“Fuelling buyer demand by way of a stamp duty incentive without addressing the issue of supply has already cultivated an overheated, unstable market.
“It’s only a matter of time before today’s stamp duty saving is wiped out by the ever increasing cost of a property itself, or we see a correction in the form of a house price crash.”
Trevor Morriss, Principal at architecture studio SPPARC, said: “Cutting stamp duty is a welcome move for those at either end of the housing market, whether you are a first-time buyer struggling to put your first foot on the housing ladder or a homeowner looking to downsize. At a time when housing supply is shockingly low, policy must serve to make the availability of housing of all types and tenures more fluid for all demographics.
“The fly in the ointment is that stamp duty will always be a sticking plaster placed over the failure to address an imbalance of demand and supply. Discarding the 300,000 homes-per-year target set by previous governments will only widen the gap between the haves and the have nots.
“A dual approach is needed to help put the wheels back on the housing market while committing to new supply to meet overwhelming demand whilst prioritising those homes being delivered are of the typology and mix that are actually most required.”
Rich Horner, head of individual protection at MetLife UK, said: “Among the range of policies, today’s stamp duty cut would’ve been most welcomed by first-time buyers and those already in the process of moving. However, whether this is just a short-term fix to a longer-term problem isn’t clear. Homeowners are stuck between a rock and a hard place right now. Mortgages are one of the biggest financial commitments people make. And yet, our research revealed a worrying 46% of homeowners have no mortgage protection whatsoever, at a time when so many are highly concerned about their ability to make necessary repayments.
“With affordability at the forefront of people’s minds, families will be looking for ways to prevent them from being financially vulnerable.”
Ritchie Clapson CEng MIStructE of property development training company propertyCEO, said: “These stamp duty changes are good news for first-time buyers and for small-scale developers looking to convert the thousands of unwanted brownfield sites the government has targeted with its latest permitted development rights. Brownfield conversions make ideal first-time homes, and these changes effectively incentivise both buyers and developers, and should help unlock the lack of supply at this end of the market.”
Gary Wright, co-CEO of payment technology firm flatfair, said: “Increasing demand through cuts to stamp duty, while having no meaningful plans to increase supply, is a recipe for yet more unsustainable house price rises. The pandemic proved this.
“Overvalued homes do not equal economic growth anywhere except on paper. The effects won’t be felt in wider society. If this government is serious about sharing the benefits of a high-growth economy, it would do well to mitigate the impact of the cost of living crisis on renters, who are often the most vulnerable in society. Reforming the tenancy deposit system to incorporate more than just a punishing traditional five-week deposit – which averages more than £2200 in London – would be a good start.”
Avinav Nigam, co-founder of Europe’s first real estate investment platform IMMO, said: “The new UK government is aiming for growth by a thousand tax cuts, but there is an argument that the budget should have been looking to stimulate the economy through investment on the supply side that would make us resilient to similar future shocks, such as funding a mass retrofitting programme in housing.
“Sky high energy bills are exacerbated by Britain’s ageing and leaky housing stock, which is particularly an issue in the private rented sector, yet the budget is more focused on the demand side by helping would-be buyers.
“Retrofitting isn’t something the taxpayer has to solely shoulder the cost of - there is a growing weight of institutional capital wanting to both ‘do green and do good’ while also growing its exposure to UK residential thanks to the promise of liability-matching, long-term income generation in the sector. Tapping into this pool of patient capital would be a win-win situation for all parties. Rewriting this ‘social contract’ in housing will mean that the public benefits the most, as housing standards get greatly improved without further burdening the taxpayer.”
