Stamp duty cut saves homebuyers £108m

Stamp duty cut saves homebuyers £108m
 Credit: Joe Giddens/PA Wire

Residential buyers have saved up to £108m since the stamp duty was cut in July, according to estate agent Benham and Reeves.

Analysis from the firm found 85 per cent of residential transactions across England were potentially exempt from stamp duty as of August 31, as they fell below the £500,000 threshold.

However they were still liable for the 3 per cent surcharge on second homes.

On July 8 the residential stamp duty threshold was increased from £125,000 to £500,000 for nine months until March.

Benham and Reeves has estimated the total savings over the duration of the stamp duty holiday could amount to £524.9m.

Of 16 major cities, the agent found that London had so far seen the lowest proportion of transactions that were exempt from stamp duty, at 48 per cent.

However, it added that London buyers had saved the most as a result of the stamp duty cut, potentially up to £25.2m.

Marc von Grundherr, director of Benham and Reeves, said: “Given the fact that the holiday has only been in place for a few short months, the money saved by homebuyers as a result is quite astounding.

“Of course, it has caused demand to go through the roof and so you could argue that in ‘regular’ market conditions the saving wouldn’t be quite as considerable.”

He added: “You could argue that the tax should be abolished completely as it’s nothing more than an archaic money grab from the government, to the detriment of those who are already stretching to afford the most expensive purchase in life.”

Some mortgage advisers have previously expressed their support for a permanent cut to stamp duty, amid predictions of a drop in activity when the holiday ends.

Mr von Grundherr thought the stamp duty cut had helped the housing market bounce back from the uncertainty of the pandemic at an “alarming rate” and had helped to avoid a property price crash.

Figures from the Halifax house price index out yesterday (October 7) found house prices in September were 7.3 per cent higher than in the same month a year earlier, after seeing the strongest growth since June 2016.