Stamp Duty cuts would NOT help the market, claims tax specialist

A prominent tax specialist has suggested that stamp duty cuts would not help improve the housing market, despite many agents suggesting otherwise.

David Hannah, founder and principal consultant of Cornerstone Tax, says:

“Throughout other economic crises, stamp duty changes or relief have historically done very little to get the market moving again and there is no reason why it would help this time around either.

“It has been and still is a poor tool for managing market behaviour. With low-deposit mortgages almost disappearing altogether, people are having to assess their options, but there are some ways that I believe the government could help first-steppers.”

Hannah says that instead, government-backed purchase mortgage guarantees for borrowers would be “a great way” to install confidence in the mortgage market.

He says that if the term of these guarantees were for five years, for example, the inflation of the housing market during the medium term would wipe off any negative equity on those properties.

The specialist said:

“This would give the market some security again, help buyers, and get the market moving again.”

While other stimuli such as an extension of Help to Buy would almost certainly help the market, he insists that reinstating 95 per cent mortgages would be “almost essential” in allowing current renters to become tomorrow’s homeowners.