The Chancellor is considering a stamp duty holiday to help boost the housing market, according to government sources quoted in The Times.
Rishi Sunak is expected to announce the plans on Wednesday in an economic update, although the measures may not come into force until the Autumn.
It is believed Sunak is looking to increase the threshold at which the tax is due from £125,000 to as much as £500,000 for a period of between six months and a year.
First-time buyers are currently exempt from paying the tax on homes worth up to £300,000, but those who have previously owned property have to pay a rate of 2 per cent on homes over £125,000.
The tax increases to 5 per cent for homes worth between £250,001 and £500,000, with the higher charge made against the portion of the property above the £250,000 threshold.
If the Chancellor were to exempt all buyers from paying stamp duty on homes worth up to £500,000, this would equate to a saving of more than £2,000 on the average house purchase of £232,000.
MT Finance director Tomer Aboody says: “While plans for a stamp duty holiday are a step in the right direction, what has been suggested so far does not go far enough.
“The threshold for higher-end properties – £1m-plus – is still at extraordinarily high levels, which prevent many from selling or buying. “While giving a stamp duty holiday at entry level, why not also reduce the higher-end stamp duty to previous levels where it was a set amount?
“This would allow, even for a short period, for the market to evolve, and for buyers to move up and down the ladder more easily.
“This, in turn, would stimulate the economy as people move, develop, refurbish, buy furniture – bringing in a lot of business across the board and boosting jobs.
“Many older buyers who would like to downsize would also benefit as they understandably do not want to spend a big chunk of retirement income on stamp duty when selling up and buying something smaller.
“Overall the Chancellor’s ambition and help throughout this difficult period has been extraordinary.
“The stamp duty problem is one which has been an issue for a few years now, and it is time to tackle it.
“The UK economy is built on housing – let’s get this moving, which will get the rest moving.”
Property management firm Ringley’s group managing director Mary-Anne Bowring says “The Chancellor’s proposals to exempt most homebuyers from paying any stamp duty under plans to kick-start Britain’s economic recovery is welcome news.
“A stamp duty holiday would no doubt cause a rush of transactions and help breathe life into a housing market that has been put into deep freeze in an effort to battle coronavirus.
“The government should be looking at long-term solutions as well as short-term sticking plasters when it comes to fixing the UK housing market.
“Millions of Brits were already renting, and that number was predicted to grow anyway with or without coronavirus.
“The disruption caused by coronavirus will likely see rental demand grow, as banks squeeze potential buyers with tighter lending restrictions and people put off buying or selling a home as it becomes clearer Covid-19 has caused continued uncertainty and disruption in the medium term.
“Eliminating additional stamp duty for buy-to-let investors would help stimulate the supply of rental homes while also driving wider activity in the housing market.
“Landlords are a crucial source of development finance through off-plan sales and will help support getting Britain building again.”
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