Vanessa Hale
Director, Research
The Chancellor has announced Stamp Duty Land Tax relief for England and Northern Ireland as part of the Government’s ‘Mini Budget’
On 23rd September 2022, The Chancellor, Kwasi Kwarteng, announced permanent SDLT cuts in efforts to boost consumer confidence and mobilise first-time buyers.
The changes that have taken place, applicable in England and Northern Ireland, are effective as of midnight 23rd September 2022.
The changes are as follows:
- The nil rate band of SDLT has doubled from£125,000 to £250,000
- No stamp duty payable by first-time buyers up to£425,000
- Increase in value of property on which first-time buyers can claim relief, from £500,000 to £625,000
The changes are claimed to mean that 200,000 more people every year will be able to buy a home without paying Stamp Duty.
There are no changes at present to LBTT in Scotland, nor to LTT in Wales.
Our research team gave their thoughts on the relief announced and what this could mean for the housing market.
Vanessa Hale, head of Research at Strutt & Parker says, “There have long been calls for Stamp Duty reform. Rates have steadily increased since the late 90s, as a means to raise taxes and in response to rising house prices. Since 2009, the SDLT has raised over £125 billion in tax revenues, assisted by the 74% increase in UK house prices over the same period.
“This has, however, made the housing market increasingly inaccessible for first-time buyers, who need to find the funds for even bigger deposits as values have risen, and ‘lost’ money on purchase costs. While the changes today sound attractive, we question the real impact they will have, especially following the further increase in the base rate yesterday and the price of mortgages rising further. There may have been a missed opportunity here to consider SDLT relief for homes with high EPC ratings in the face of the climate crisis.
“The Stamp Duty cuts, which tops out at £2,500 for those who are not first-time buyers in England and Northern Ireland, are unlikely to boost transaction volumes and help consumer confidence. However, the relief of up to £11,250 for first-time buyers will be welcome for those struggling to get on the housing ladder.”
Matt Henderson, Residential Research Analyst at Strutt & Parker, added, “A full restructuring of SDLT is needed in order to further reduce the barriers for first time buyers entering the market and to create liquidity around downsizers releasing underutilised stock back into the market.
“Without this, the cuts will likely inflate house prices as stock shortfall remains symptomatic to the market. Whether this is something relaxed planning regulation within Investment Zones is able to combat we shall have to wait and see. Incentivising investment and development is a positive step in the right direction for an imbalanced market however a lack of detail on this means we have no clarity on how this government expects to create new investment and development, rather than simply relocating it.”
For more information on Stamp Duty visit: https://www.gov.uk/government/publications/rates-and-allowances-stamp-duty-land-tax