The Chancellor, Rishi Sunak, has today confirmed the Government will temporarily increase the nil-rate band of residential Stamp Duty in England and Northern Ireland from £125,000 to £500,000 until March 31 next year.

This is of course great news for the property market. 

Even though we have seen a significantly busy post-lockdown market, cutting Stamp Duty on purchases up to £500,000 really will be the catalyst to persuade buyers, who previously had sat on their hands due to political and economic uncertainty, to purchase a home. 

If supply of stock is still low, a flood of buyers coming to the market will potentially bring with it a price increase as demand outweighs supply.

Therefore, this news is also likely to spur on sellers as they look to take advantage of the higher amount of buyer activity, which could mean second steppers benefit even more than first-time buyers.

COVID-19 is likely to have affected many people's situations, such as a change of job role and/or working more from home more. Therefore the stamp duty reform may provide the additional push for many to sell and buy a property in a different location due to less commuting requirements, or for more space.

There are questions which still remain, such as how will the Government recoup this money in the future? However, the stamp duty on buy-to-let and second home purchases do remain unchanged.

Zoopla have stated that "89% of sales will be exempt from the basic level of stamp duty, 73% more than today’s exemptions"

They added "£3.8 billion could be saved by buyers, boosting the wider economy as they invest in home improvements, white goods and furniture"

Whilst Rightmove Indicated "people enquiring about properties under £500,000 on Rightmove makes up 84% of all buyer enquiries in England."

The evidence of past stamp duty holidays is that it can boost sales activity overall.

House prices may differ across the country, and we are likely to see the greatest beneficiaries in and around London, where up to 95% of sales would be stamp duty-free. 

Overall the reforms may boost the economy as buyers redirect those funds to spending, therefore the cost to the Treasury, even though significant, is relatively modest when compared to the £39 billion it’s reported to cost the government to run the furlough scheme.

If you have any questions about how stamp duty impacts you, please give me a call or email me using tom@gracechurch-property.co.uk.

Until next time
Thomas