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  • Writer's pictureNoel Aloko

Stamp duty land tax slashed

The threshold for stamp duty land tax (SDLT) has been doubled to £250,000 for all home purchases with immediate effect

The current £125,000 nil rate threshold has been doubled to £250,000, bringing the figure close to the average UK house price. The change will come into force from 23 September.

At the same time, the threshold at which first-time buyers begin to pay SDLT will increase from £300,000 to £425,000, and the maximum value of a property on which first-time buyers’ relief can be claimed will also increase from £500,000 to £625,000.

This measure will cost £1.4bn in 2023-24, rising to £1.5bn in 2024-25.

Lizzie Murray, partner in the private wealth team at Saffery Champness, said: ‘Cuts to stamp duty will always play well with the electorate and may well incentivise those who have been putting off making big life decisions given cost of living and inflationary pressures. The challenge though is that recent history suggests that cutting stamp duty risks pushing up property prices, with buyers seeing little real terms benefit, or facing increased competition.’

The increase in the threshold gives a welcome boost to first time buyers.

Paul Falvey, tax partner at BDO said: ‘Today’s reduction in stamp duty land tax (SDLT) will be a welcome boost to some buyers, particularly those who were marginally above the previous nil-rate. Hopefully at the full Budget expected later this year, the Chancellor will consider further SDLT reform to incentivise those in spacious properties to downsize, to free up space for families. The news on supply side reforms might prove more impactful for young people as building new homes must be a priority given the scant supply.’

Lee Nuttall, head of tax at the law firm Gowling WLG, said: ‘This will inject some much-needed buoyancy into the property market where the number of transactions has decreased significantly since the Covid-19 stamp duty holiday ended.

‘It should stimulate a significant amount of new transactional activity (both for developers and consumers) which is needed to maintain levels of demand and supply and remove a significant obstacle to mobility. It will be interesting to see how the market responds to future development opportunities in light of this concession.’

The Chancellor also announced that he will further support homebuyers by increasing the disposal of surplus government land to build new homes, increasing supply.

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