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Calls for permanent stamp duty cut as market drop predicted

Calls for permanent stamp duty cut as market drop predicted

The stamp duty holiday should be made permanent, mortgage advisers have said, amid predictions of a drop in activity when the policy ends.

Brokers received an influx of enquiries after the government announced a temporary cut in residential stamp duty last month, but some advisers have predicted that activity would decrease when the tax threshold falls back to £125,000 in April.

Chris Sykes, mortgage consultant at Private Finance, noted an “inundation” of new clients since the announcement, mostly comprising first-time buyers and homeowners expediting their plans to up- or downsize.

Mr Sykes said: “With so many moving plans forward I think we are going to see a quiet few months April-June next year as everyone will rush to get transactions through by the deadline”.

Andrew Brown, managing director at Bennison Brown, also anticipated a decrease in sales volume in Q2 after the stamp duty holiday ends.

Mr Brown said: “It provides us with a real challenge to resource but a welcomed challenge and we have had back-to-back record written business levels in June and July so we are certainly not complaining about the scheme coming to an end but something we will have to plan for." 

But there have also been calls for the stamp duty break to be made permanent.

On the day the holiday was confirmed, Professor Syed Kamall, academic and research director at the Institute of Economic Affairs, said: “The cut to stamp duty is welcome but why isn’t it permanent? It is a destructive, regressive tax that clogs up the housing market and limits labour mobility.

“Making it permanent would get the property market moving and encourage those who want to downsize as well as those looking for family houses, freeing up homes for first-time buyers.” 

Anthony Rose, director at LDNfinance, agreed. He said: “There either needs to be an improvement to the current rules or a version of this holiday should be implemented permanently moving forward.

“If it isn’t, we would expect there to be a natural drop in activity come March. It’s what the market needs in order to fully recuperate, as the stamp duty situation before this holiday was putting people off moving.”

Private Finance’s Mr Sykes said: “I think stamp duty has become more and more of a restrictive tax over the years as house prices have only increased and stamp duty hasn’t banded with the property price changes so personally I would like to see more done by the government and think this stamp duty break should be indefinite”. 

chloe.cheung@ft.com