There is growing speculation that the Chancellor Jeremy Hunt will include changes to stamp duty in his Autumn Statement, delivered on November 22.
Housing is seen as a key issue for the government, with the Leasehold and Freehold Bill included within the King’s Speech this week. While the Chancellor’s capacity for tax giveaways is limited, targeted stamp duty reforms could stimulate activity in a sluggish property market and support house prices. This could be seen as appealing to voters ahead of a general election within the next 14 months.
Tax accountants point out that Hunt may have more fiscal headroom to make changes, following public finance projections from the Office for Budget Responsibility. This suggests that the amount of money the Chancellor can spend and still hit his target of reducing debt within five years, is now £13billion — twice the level forecast in the Spring.
Evelyn Partners head of tax Sian Steele says that stamp duty could be one “crowd pleasing” tax-cut targeted by the government.
She says: “SDLT has come under increasing criticism for congesting some parts of the property market and being a disincentive towards downsizing for older homeowners, and even damaging UK business by restricting labour mobility.
“A dearth of family homes on the market is making it less possible and more expensive for younger buyers looking at in-demand areas to move into larger properties.
“Many retirees, instead of downsizing, resort to equity release and lifetime mortgages but such loans can become unexpectedly expensive and burdensome, and in some cases leave a nasty surprise for the beneficiaries of an estate.
“The notion that SDLT acts as a drag on moving at this and other rungs on the property ladder has propelled it into Autumn Statement speculation. Reports suggest that the Conservatives are looking at some sort of further stamp duty relief or reduction which could be a popular but relatively inexpensive move.”
The Conservative government has previously introduced stamp duty holidays – including during the Covid pandemic – as a tool to stimulate activity in the housing market. However some in the industry have criticised these for being too blunt, and potentially inflating house prices, negating the benefit of this tax reduction.
Steels says there has been some noise in recent years that a more radical approach of stamp duty being borne on disposal rather than acquisition of a property would both incentivise downsizing and boost new buyers entering the market. But she says this may be too long in the implementation to give the incumbent Government the pre-election boost it seeks.
She adds that it has also been reported that Hunt could link stamp duty relief or rebates for first-time buyers to green home improvements made post-purchase.
It is also thought Hunt will extend the Help to Buy mortgage guarantee scheme to help more first-time buyers borrow with a 5% deposit. The scheme was extended for 12 months to finish in December 2023, but may continue for another year.
However, unsourced comments in the media suggest that Hunt won’t be making plans to the Lifetime ISA (LISA) which can be used to fund a first home purchase.
Currently these can only be used for property’s priced up to £450,000 – a figure which has not increased since 2017, despite house prices rising by around 35% over this period. Those using these saving to fund a deposit on a more expensive property effectively pay a penalty to access their money.
Martin Lewis, founder of the website MoneySavingExpert has written to the Treasury and the FCA calling for these thresholds to be updated.
