Truss to scrap stamp duty in bid to boost property market

21 Sep 2022

The UK Prime Minister will announce plans to cut stamp duty in the government’s mini-budget this week in an attempt to drive economic growth via the country’s property market, according to The Times. Liz Truss and Kwasi Kwarteng, the new Chancellor, have been working on the plans for more than a month and will announce them on Friday, says the report. It reads: “Truss believes that cutting stamp duty will encourage economic growth by allowing more people to move and enabling first-time buyers to get on the property ladder.” Most experts agree that any cut in the tax will likely bolster home prices, which soared during the pandemic when the tax was suspended for many buyers in order to boost demand. Former chancellor Rishi Sunak introduced a stamp duty holiday in 2020 in an effort to buffer the property market from the impact of the pandemic. Raising the threshold for paying stamp duty from £125,000 to £500,00 cost the Treasury £6.4bn.

Rising mortgage rates and the cost-of-living crisis have since led HSBC to warn earlier this month that the UK is on the “cusp of a housing downturn.” Homebuilders Persimmon and Berkeley Group Holding climbed more than 6% on Wednesday before paring gains. Broker Foxtons Group gained as much as 2.1%. “A stamp duty cut may revive the fortunes of UK homebuilders, who started seeing normalisation of activity from frenetic levels of the last two years,” said Iwona Hovenko, a real estate analyst at Bloomberg Intelligence. On Tuesday Ms Truss confirmed she would be reversing the national insurance hike and scrapping the planned increase to corporation tax on Friday. She also effectively confirmed a plan to abandon the cap on bankers’ bonuses as she argued she needs to make “difficult decisions” under her political and economic fight to concentrate on economic growth. Sharing the details of the mini-budget will be one of the Chancellor’s first tasks, as he entered the role in early September. Politicians from across the divide have also insisted that Mr Kwarteng also share an economic forecast.