The UK government could announce a stamp duty holiday for home buyers in a bid to boost economic recovery from the coronavirus, according to reports.
Chancellor Rishi Sunak is said to be weighing up raising the threshold for the tax to between £300,000 ($374,697) and £500,000, leaving the average property exempt from the tax.
Stamp duty land tax (SDLT) is levied on property buyers as a percentage of the purchase price. Home buyers pay between 2% and 12% of the value of the property above £125,000 in England and Northern Ireland. Thresholds are already higher for first-time buyers.
The tax has been devolved to the Scottish and Welsh governments, which have renamed it and varied the rates. The reports did not make clear how the changes being floated could affect Scotland and Wales.
According to the Times, Sunak will unveil details of the reforms on Wednesday as part of a wider announcement on planning for economic recovery. But the measures are reported to be pencilled in for implementation later this autumn, raising the prospect of some buyers delaying transactions until it has come into effect.
It comes as mortgage lenders’ and property listing sites report falls in UK house and flat prices as the market emerges from a government-imposed shutdown because of the pandemic.
Data from Nationwide last week showed prices falling month-on-moth for a third month in a row, and dropping year-on-year for the first time since 2012. Prices in June dropped 1.4% or around £2,500 on the previous month, after sliding 1.7% in May — the biggest monthly drop in 11 years.
But the pandemic has had only a relatively limited impact on house and flat prices so far, given Britain is facing the steepest economic downturn in decades.
Estate agents say would-be buyers have been left disappointed not to secure bigger bargains in recent months, with a leap in activity as the lockdown eases. Rightmove reported asking prices were £6,000 higher in June than in March.
Zoopla’s research director Richard Donnell said in early June the spike in demand since restrictions were eased may prove “short-lived,” with Britain’s economic troubles likely to “feed through” into market sentiment later this year.
Bank of England analysis in May suggested UK property prices may drop 16% this year, as the economic fallout grows and government support is tapered off.
The Treasury declined to comment.