Sep

LATEST: Chancellor cuts stamp duty but no direct tax relief for landlords

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Kwasi Kwarteng failed to deliver the hoped-for repeal of Section 24 in his mini-Budget but confirmed a permanent cut in stamp duty.

The chancellor raised the threshold before stamp duty is paid to £250,000 and for first-time buyers, to £425,000 – cuts universally panned by mortgage brokers who’ve labelled them a catalyst for stimulating an overheated property market.

As expected, next year’s planned corporation tax increase was ditched and will remain at 19%, the basic rate of income tax will be cut to 19p in April 2023 – one year early – the 45% top rate of tax for higher earners was abolished and Kwarteng also confirmed a reverse in the increase in National Insurance.

“We want this country to be an entrepreneurial economy,” he told the Commons. “The tax system needs to be much simpler – people should keep more of the money they earn. We are determined to break the cycle of higher taxes hampering growth – we need a new approach for a new era.”

Kwarteng also announced the creation of new investment zones, where the government will liberalise planning rules, release land and accelerate development. To increase housing supply and enable forthcoming planning reforms, it will also increase the disposal of surplus government land to build new homes.

Labour’s shadow chancellor Rachel Reeves (pictured) said stamp duty cuts had been tried before. “The last time the government did it, a third of people who benefited were buying a second or third home or buy-to-let property – is that really best use of taxpayers’ money when debt is already so high?”

She asked if the chancellor could confirm how much of the stamp duty cut would go to those buying multiple properties. “Instead of stamp duty going up like a yo-yo we need to get building, target support at first-time buyers and tackle the issue of homes being sold to overseas investors.”

Commentary

Rightmove’s housing expert Tim Bannister

“Demand has been softening over the last few months but today’s announcement is likely to stimulate some more demand.

“If it does lead to a big jump in prospective buyers competing for the constrained number of properties for sale then it could lead to some unseasonal price rises over the next few months.

“But because the change is permanent, and because of gathering headwinds such as rising mortgage rates, we expect to see a more gradual increase in demand compared with the surge when the temporary stamp duty holiday was announced in 2020.

“Plus, buyers could save up to £15,000 during the temporary stamp duty holiday, while the savings are lower with this change.

“The first-time buyer threshold change means we could see more first-time buyers who can afford it making a jump to a bigger home as their first move. With more buyer demand we would also expect that the current trend of more properties coming to market will continue, offering more choice for buyers.”

Read more about the stamp duty cut.

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