Zoopla comments on possible changes to Stamp Duty

Richard Donnell, Zoopla’s Research and Insight Director, on possible changes to Stamp Duty that it is believed will be introduced in Wednesday’s Summer Economic Update.

“Stamp duty holidays are a tried and trusted way to support housing market activity and provide an additional incentive to move home at times when the economy has been hit. Temporarily removing stamp duty for homes up to £500,000 for 6 months will cost the Treasury £1.3 billion but it will ensure almost nine in ten sales will be free of the tax, compared to just 16% now. The greatest benefit will be found in markets across southern England where there are more homes with average prices closer to £500,000.

“Housing activity has already rebounded strongly since the market reopened and any major change to stamp duty would provide a further boost to demand for housing. The Government would hope that the savings feeds into additional spending in the real economy with more cash spent on home improvements and white goods rather than enabling buyers to spend that bit more on their next home.”

Supporting information:

1. Today 16% of sales in England are exempt from stamp duty, falling under £125k price band
2. This policy would extend stamp duty saving of up to £14,999 for a home purchase (non-first-time buyer)
3. It would mean an extra 73% of sales would be exempt from the basic level of stamp duty i.e. 89% in total
4. It would mean a c. £1.3bn in stamp duty saving (assuming a 6-month policy)
5. The greatest beneficiaries are affordable areas in and around London where up to 95% of sales would be stamp duty free.
6. There are 28 local authorities where >90% of home sales would be stamp duty free compared to <5% today – see table:

Kindly shared by Zoopla