New Prime Minister Liz Truss and Chancellor Kwasi Kwarteng are considering lowering stamp duties, The Times reports.
The cut is believed to be announced this Friday, September 23, as part of his cabinet’s mini budget.
Truss has made no secret of his wish to cut taxes in a bid to boost Britain’s economy, which is an important part of his leadership bid.
Indeed, during a visit to New York yesterday, September 20, Truss told American reporters about taxes: “Lower taxes lead to economic growth, there’s no doubt about that in my mind.”
The stamp duty property tax accounts for a large portion of the country’s tax revenue. Government statistics released today show land stamp duty receipts from April 2022 to August 2022 amounted to £8.9billion, a jump of £2billion on the same period Last year.
So far, lenders and brokers seem lukewarm on this idea. For example, the chief executive of the Leeds Building Society, Richard Fearon, said: “Reducing stamp duty rates across the board would just be another short-term quick fix which will ultimately make the crisis worse. housing and not improve it.
“The Prime Minister and the Chancellor rightly want to prioritize growth. But they should achieve this in a much more sustainable way by investing in building enough homes, not by funding across-the-board stamp duty reductions. Using the tax system in this way will drive up house prices, which will only exacerbate the problems faced by first-time buyers.
“Governments have successively resorted to quick fixes to increase demand rather than addressing structural flaws in the housing market and ensuring sufficient supply.
Meanwhile, Dimora Mortgages director Jamie Lennox said: ‘Stamp duty undoubtedly needs reform but a repeat of the 2020 holiday is not necessarily the answer as it has created a very overheated market with many people paying far more for a property than they have saved. in stamp duty.
“The other problem is that when a public holiday ends, it’s as if a tap has been turned off and there are no new properties on the market. However, with interest rates rising significantly from record lows in 2020/2021, I’m not sure this will have the same impact as last time. »
He continues: “We would prefer a reform that brings the rate to zero at the average house price, which increases each year with the house price index. Helping more people buy an average home without paying taxes would be much more sustainable in the long run, but it may be too long term and not a winning vote.
However, Moneyman’s UK director Malcolm Davidson argues: “Why should anyone be taxed to buy a family home in the first place? There are many other ways to increase tax revenue without punishing the ambitious.
“The only thing I would say is make it a real tax cut, not a holiday, to avoid another rush of action. Stamp duty deters homeowners from putting their properties up for sale and is a major contributing factor to the lack of homes currently on the market.
“If stamp duties were reduced, that should encourage more people to sell. Stamp duty is ripe for an overhaul. It is paid by buyers on the asset that someone else has made all the profit on. If he really should stay, the Treasury should consider transferring the charge to the seller.
And Finanze’s chief economist, Edgar Rayo, estimates that any reduction in stamp duties will contribute to a 3-4% rise in property prices by the end of 2022. He says: “Despite the crisis of the cost of living and the rise in rates, this could restore confidence to buyers. in the housing market after the zero rate bracket fell to £125,000 last year.
“However, properties in different price brackets will have varying reactions to the tax cut, as happened with the recent stamp duty suspension. Rather, the impact will be felt in the number of transactions.