Labour warned ‘nobody will be able to afford to move house’ if stamp duty raid goes ahead!H
Removing the relief will cause a spike in house prices and limit supply, experts warn.
Labour’s proposed stamp duty changes could make moving house more unaffordable for many, experts have warned.
Analysis by Hamptons estate agents shows that without extending the stamp duty discount beyond April, the average downsizer would face a tax bill of £2,850, up from £2,500 today.
Aneisha Beveridge from Hamptons highlighted that the upcoming changes would see nine in 10 movers paying stamp duty, compared to just over half today.
She noted that the increasing burden of stamp duty has become a significant factor for downsizers, making them more likely to stay put, further limiting the housing market supply.
The stamp duty relief was temporarily increased by the Conservative government, raising the nil-rate threshold to £250,000 for general buyers and £450,000 for first-time buyers.
Removing the relief will cause a spike in house prices and limit supply (Image: Getty)
However, this measure is set to expire in March. During the election campaign, Labour said it did not plan on extending it. However, industry experts warn scrapping the relief would create “chaos” in the housing market, the Telegraph reports.
Experts have called for targeted relief for downsizers, with some suggesting a stamp duty exemption for people moving from larger family homes to smaller properties.
Others are urging for Ms Reeves to at least keep the relief for first-time buyers, amid concerns many more will be priced out of the market. Jon Cooper, director of mortgages at Aldermore, said: “We’ve seen homeownership become more difficult to attain, yet it remains a big life goal for over three in four prospective buyers.”
According to research conducted by Aldermore Bank, more than one in 10 recent first-time buyers (FTBS) said the cost of stamp duty was the hardest part of the home-buying process.
Mr Cooper said: “We can expect to see this sentiment significantly increase if the threshold is reduced. FTBs are desperate for more support to help them get on the property ladder, and while there is no silver bullet, keeping the threshold at the current £425,000 will make a considerable difference to many.”
Peter Stimson, head of product at MPowered Mortgages echoed this, warning removing the relief would heighten FTB inequality and “undermine” the Chancellor’s efforts to tax those with the “broadest shoulders”.
Mr Stimson said: “The Government must avoid a cliff edge withdrawal of the Stamp Duty relief offered to first-time buyers. If they don’t, we could see another ‘stamp duty stampede’ and a spike in prices as buyers rush to complete purchases before the deadline.
“This would cancel out any benefit buyers might have enjoyed from extra affordability and set prices ratcheting up again. Better to taper the relief away.”
A Government spokesman said: “We do not comment on speculation around tax changes outside of fiscal events.”
