"What always happens when you create a deadline? It creates a rush to hit the deadline which pushes up prices artificially, and also, what comes next? "
Chancellor Jeremy Hunt has announced that the recent cuts to stamp duty will be reversed in 2025.
Speaking during today's Budget, Hunt said: “The OBR 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.”
During the last Budget in September, then-chancellor Kwasi Kwarteng announced an increase in the stamp duty threshold from £125,000 to £250,000 and from £300,000 to £425,000 for first-time buyers.
Rightmove’s property expert, Tim Bannister, said: “The clock now ticking on potential stamp duty savings will bring a bit more urgency for people trying to get on the ladder or trade up in the next few years. As it’s still in place for a couple of years we don’t foresee a significant number of people bringing their plans forward to 2023, especially due to current affordability challenges, but we may see a jump in new sellers towards the end of next year and into 2024 to ensure they can move in time. The total time it takes to buy and sell a property is currently around six months, meaning people will need to be well on their way by late summer 2024.
“It’s likely to be most challenging for first-time buyers with smaller deposits, as we know it’s currently taking them an average of five years to save up enough for a deposit. The average monthly mortgage payment will be lower if they’re able to raise a bigger deposit, so we may see more people looking to friends and family for help with a deposit to be able to bring their plans forward before the current stamp duty savings disappear in 2025.
“However, the current savings are lower than the stamp duty holiday of 2020, so we don’t foresee the removal having a significantly dampening effect in 2025, with factors such as mortgage rates and house prices likely to have a much bigger impact on activity levels.”
Scott Clay, head of introducers at Together commented: “The Chancellor gave fair warning in the setup of today’s Autumn statement: difficult decisions to keep mortgage rates down were clearly touted with promises of the Government and bank working in lock step to fight inflation and avoid spiraling interest rates. However, with the OBR expecting housing activity to slow significantly next year; the decision to “sunset” stamp duty cuts in March 2025 in a bid to jumpstart the market is short-sighted. While this will likely force first-time buyers and those looking to move house to jump before they’re pushed and missed out on a good deal; there are swathes of potential homeowners who have been overlooked by this decision. Our research shows there are swathes of potential borrowers, much of which who are considered non-standard by the mainstream market who are at real risk of being shut out altogether. While strong measures are needed to save our flailing economy, famine always follows feast.”
Richard Campo, founder of broker firm Rose Capital Partners, added: “Putting a deadline on the Stamp Duty changes is a really bad idea. The only good thing that came of the infamous mini budget was that the stamp duty allowance wasn’t time limited. What always happens when you create a deadline? It creates a rush to hit the deadline which pushes up prices artificially, and also, what comes next? Going back to the current scheme or not? That wasn’t mentioned so the devil will be in the detail here."
