Chance of the Exchequer Rishi Sunak is under increasing pressure to bring forward a much rumoured reduction in UK property stamp duty. If the rumours are correct he is considering a significant change in property stamp duty charges for a six-month period. The idea is simple, to breathe new life into the UK property market and encourage buyers to jump on aboard.
Surely that is what the market is after?
While the rumours are getting stronger, it looks as though any change in the stamp duty structure were not planned until the autumn budget which is traditionally around the October/November time. The problem is that if the UK government hold back on restructuring property stamp duty in the short-term, with plans for a change in October/November, potential buyers will simply sit on their hands until the stamp duty reduction kicks in.
In theory this could stop any hoped-for support for property prices in the short to medium-term. Why buy a property today, with markets still under pressure, in the knowledge that the same property might be fully/partially exempt from stamp duty come autumn time? It is a very valid question and one which is prompting serious concern within government circles and the UK property sector.
Rumoured stamp duty cuts
If the rumours are correct the current stamp duty levy:-
• No charge up to £125,000
• 2% between £125,000 and £250,000
• 5% in the next £675,000
Could be slashed dramatically with rumours that the new structure could be:-
• No stamp duty up to £300,000
• OR even up to £500,000
When you consider that first-time buyers are already exempt from stamp duty up to £300,000 outside of London and up to £500,000 in the capital, this would likely bring all stamp duty regulations into line. There is no doubt that this would have a very positive effect on the UK property market, at worst offering significant support in troubled times and at best creating short to medium-term upward momentum.
Has the government been boxed into a corner?
You have to wonder how these rumours “escape” from inside government especially when they are so sensitive for the UK property market. While it would be inconceivable that the government had leaked this information themselves, placing huge pressure to bring changes forward, we live in a very strange world today. So, if the rumours are true what can the government do next?
At this moment in time Rishi Sunak is the golden boy of the UK government, topping a recent poll of UK government ministers. There is growing speculation that he may be forced to bring forward his planned stamp duty changes to this week when he delivers an update to the House of Commons. Would this be the perfect chance to play the media? Or will the government show it’s more stern side and wait until the autumn budget?
It is beginning to feel as though the UK government is being backed into a corner and will be forced to bring forward proposed changes, possibly this month. This would certainly curry favour with the UK public as well as property investors. Whether it is a bridge too far at this moment in time with regards to government finances is a valid question to ask. However, there is no doubting that any such move would be well received by property investors.