There has already been a lot of discussion around the likely changes to the UK Stamp Duty threshold and the government raising it to £500,000. Thank you to Grainne Gilmore – Head of Research at Zoopla, for her informative take on the imminent announcement. A link to the Zoopla article can also be viewed below. In the meantime, we asked Alistair Hargreaves – a Financial Consultant in our Mortgage team and Matthew Yassin - a Director in our Structured Finance team, for their views on Rishi Sunak’s highly anticipated announcement today.
“Clearly, any stamp duty holiday is a good thing for people buying properties that are lower in price and between £300,000 and £500,000. I think the change to the threshold is a good start, but probably not enough to kickstart the housing market overall.
When I have previously spoken to clients about such a change in a hypothetical sense, their response has been that it is really nice giveaway not having to pay the stamp duty up to the value of £500,000, however, it isn’t going to spur someone on to buy a house. If, for example, the Chancellor was able to suspend the stamp duty rate for a property up to the value of £1 million, that would make a real difference, because you’re then not having to pay £30-40,000 in stamp duty costs. And someone who is potentially looking to renovate, might think actually, let’s now move house because that £30,000 we would’ve either spent on a new kitchen or on stamp duty, if we had moved, will now go towards the property cost itself. So at this level, it would be a real radical change and signify to the economy and the world that the UK is trying to push things forward.
As it stands, I think the likely change of not having to pay stamp duty on a property up to the value of £500,000 is a nice touch and it will help some people, but it’s not going to be enough to spur a client to buy a property because they’re saving £5000. It will aid, but won’t lead to an increase in transactions.”
“Any discussion about a reduction in cost - whether in the property sector or any another industry, will be welcomed by the end user. I guess the issue here is the “talk” of a movement in stamp duty could potentially put the market into a deep freeze unless this is implemented immediately or disregarded just as quickly, as no market is comfortable with any speculation. If it is confirmed that the stamp duty threshold will increase to £500,000 at a future date, then inevitably there will be a pause on the sales that will qualify and are currently going through the motions, in order to take advantage. Saying that though, if the change was introduced immediately, I guess we would welcome any mechanism to drive progress and keep the market moving given the difficulties many have faced this year.
Although I feel this is a good move, it’s not actually that far reaching given that it is mainly aimed at those first-time buyers who traditionally struggle with the cost of purchasing at house so they can get onto the ladder. However, any help in this environment can only be a good thing and I guess those that are selling to the first-time buyers will be able to make future decisions knowing that the sales will progress. This in turn allows the market to have some certainty at the lower end and have an effect throughout the UK residential market as it is invariably connected.
From a monetary perspective, the saving for first-time buyers is welcome as any saving would be, and hopefully this will increase positive sentiment. ”
