Lack of detail on how to fix supply crisis means stamp duty changes could badly backfire.

CUTS to stamp duty will provide a “huge boost” to many house-hunters – but the Government’s failure to act on dwindling supply could see the policy “spectacularly backfire”.
Chancellor Kwasi Kwarteng delivered the much-rumoured cuts today, increasing the thresholds before the property tax is paid.
Under plans set out in the mini-budget, he increased the point at which Stamp Duty is charged on property purchases from £125,000 to £250,000 for home movers.

The threshold for first-time buyers will increase from £300,000 to £425,000 and can be used on purchases worth up to £625,000.
The National Association of Property Buyers said they welcomed the move – and were particularly pleased these were permanent steps.

But the NAPB warned an ongoing lack of supply in the housing market could leave many in the market disappointed.
Spokesman Jonathan Rolande said: “We support the proposals and the fact they are here for good, or for at least the time this Government is in power, will be welcomed.
“The new threshold of £250k truly reflects price rises and property inflation we are seeing at present in the market.

“But, on the downside, there was a lack of detail on how housing supply will be increased. That is worrying. The Government has fired a starting gun today designed to encourage a frenzy of first time buyers to try and get on the housing ladder.
“Cutting stamp duty without enough housing stock is rather like shops announcing massive sales – then leaving their shelves empty for those flooding in through the doors.

“Supply simply isn’t there which means this cut could specaturatly backfire by failing to help the people it’s designed to.
“The Government’s Growth Plan promised to release more Government land to support housebuilding and to remove planning restrictions to boost supply. We now need to see the detail of that because it needs to go really far and wide to solve the supply crisis we have in the sector. There’s also the risk we could now see house prices increase in response to the spiked demand.”
On the budget’s measures Mr Rolande added: “We were expecting something radical. We were expecting a statement that didn’t simply aim to please everybody, but instead targeted those who can ‘create’ wealth. And those hoping for just that, have not been disappointed.

With top-rate tax cuts, assistance for companies, cutting 6% off their tax bill and a 1p tax cut for all, it feels like a budget from a new Government keen to make its mark and reward the country for years of hard work and prosperity. In fact the UK has been hit hard by the cost of the pandemic, the energy crisis and the subsequent inflation it helped to cause.

This budget with giveaways to put more money in people’s pockets and cutting the cost of buying a property means the market is set to hold steady, perhaps even continue its seemingly never-ending upward climb. But my fear is that without an increase in supply of property the unfairness in the market is set to be ever more ‘baked in’. Those hoping to take their first step onto the ladder soon, may well just have seen it pulled up ever further out of reach.”