Stamp duty cuts introduced in Kwasi Kwarteng’s mini Budget will remain in place, Chancellor Jeremy Hunt confirmed today, but only until 2025.
The changes, introduced on September 23 were announced as a permanent measure but Mr Hunt said in today’s Autumn Budget that the property tax break would be a long holiday instead.
He said: “The OBR [Office for Budget Responsibility] expects housing activity to slow over the next two years, so the stamp duty cuts announced in the mini-Budget will remain in place but only until March 31, 2025.
“After that, I will sunset the measure, creating an incentive to support the housing market and all the jobs associated with it by boosting transactions during the period the economy most needs it.”
Tomer Aboody, director of property lender MT Finance, said: “The Government is maintaining the stamp duty reduction for now in the hope that banks can also be more flexible when it comes to mortgages. This will enable the housing market to continue to perform, along with associated businesses within the sector, which is so important for the wider economy.
“By the time the stamp duty cuts are phased out by 31 March 2025 the UK should hopefully be in a much better place, particularly as long-term interest rates should be lower as inflation is brought under control.”
Mr Hunt reversed “almost all” of his predecessor’s tax cuts in an emergency fiscal plan, just three weeks after they were announced but Mr Hunt said he would not change the new stamp duty thresholds at the time.
Mr Kwarteng raised the lowest threshold at which homebuyers start paying stamp duty from £125,000 to £250,000, a saving of up to £2,500 for home movers.
First-time buyers get additional relief with the price they start to pay stamp duty set at £425,000, so long as the overall property price is below £625,000. This offers first-time buyers a tax saving of up to £11,250. The previous threshold at which first-time buyers started to pay stamp duty was £300,000.
In his role as pandemic chancellor, Prime Minister Rishi Sunak introduced a stamp duty holiday to stimulate the property market. Waiving the property purchase tax up to £500,000 gave all home buyers a discount of up to £15,000.
The break lasted for almost a year between July 2020 and June 2021, when the benefit started to taper off. Property transactions boomed but the tax break was also blamed for inflating house prices.