"If the housing market is working properly, that has a massive impact on the rest of the economy – so this potentially is a big boost."
Speaking during today's Summer Economic Update, Sunak announced that the measure is temporary and will last until 31st March 2021.
Sunak said the average homebuyer will save £4,000 and 9 in 10 people buying a main home this year will now pay no stamp duty at all.
Data from Zoopla shows that 16% of sales in England are currently exempt from stamp duty, falling under the £125,000 price band. Following the changes, an extra 73% of sales will now be exempt from the basic level of stamp duty - equalling 89% of total sales.
Mark Arnold, CEO at Kensington Mortgages, commented: “If the housing market is working properly, that has a massive impact on the rest of the economy – so this potentially is a big boost. A stamp duty holiday is a huge market change and this has never happened before. First-time buyers, second steppers and older homeowners will all benefit. Even before lockdown, there was a clear stagnation in housing activity on those higher up the property ladder.
“Extending the threshold to £500k frees up larger properties for growing families and enables the next generation of homebuyers to step onto or even up the ladder. Buyers will make a significant tax saving and this acts as a large incentive to keep all parts of the housing cycle moving in some of the most crucial summer months.”
Lucy Pendleton, property expert at James Pendleton estate agents, said: “The London market is the overall winner from this intervention on stamp duty. It’s the only place in the country where buyers of all kinds will benefit en masse from more significant savings simply because property is more expensive.
“Although buy-side incentives like this are always criticised for increasing home hunters’ budgets, and by extension prices, they nevertheless always seem to successfully stoke demand too, and this obviously is the Chancellor’s goal.
“The national market takes its lead from the London market, and the latter has seen growth cooling more significantly than anywhere else lately, so this is a strategic move to lend what is arguably the country’s most important market a softer landing.”
Ben Thompson, deputy CEO of Mortgage Advice Bureau, added: “The housing market has been through many cycles, but incredibly over the last 13 years has had to deal with a once in a lifetime global financial crisis, a once in a lifetime exit from the European Union and now a once in a lifetime global pandemic. During this last decade, stamp duty has also increased significantly and although we’ve seen a relatively recent overhaul of this tax, the new levels prove to be a genuine financial barrier for many people who simply need to move home.
“So we welcome today’s announcement, as it should bring some new transactions forward and create new home moves more quickly, thereby boosting the economy and jobs.
“It remains clear, however, that the Government needs to not only continue to purposefully work towards increasing the supply of homes for sale, but it also must find a means through further stamp duty changes to create a more fluid and mobile housing market, thereby not only helping people move to homes they need, but also helping economic productivity at this critical time.”
