The stamp duty cut success should not be forgotten

By Danielle Boxall, media campaign manager


Head to your local tonight, and you might see something strange: solicitors drinking and celebrating. Now, that might be because England thrashed Germany 2-0.


More likely, it’s because they are having their first night off since this time last year, when chancellor Rishi Sunak announced the slashing of stamp duty to kickstart the housing market. The temporary cut on properties up to £500,000 ended today, after months of solicitors reportedly working long into the night to complete transactions before the deadline. Tomorrow the stamp duty threshold falls to £250,000, before returning to its pre-covid level of £125,000 in September.


It’s pretty clear the cut has had an incredible effect on the housing market, despite the potential impact of the covid restrictions. At a time when family finances have been stretched, removal men have to wear masks and housewarming parties are strictly off limits, the housing market has in fact come out swinging. While we don’t have precise figures yet, stamp duty receipts for May were about £652m - or a whopping 81 per cent higher than the same time last year. With the deadline looming, the market seemingly went gangbusters. 


But when the celebrations end and those solicitors return to their desks, attention will turn to the potentially thousands of homebuyers still waiting to move. Many hopeful movers will be left disappointed today. The temporary cut created an artificial boom, and its end will feel extremely unfair to the hard-working taxpayers who may only miss it by a few weeks or even just a day or two. Tax cuts like this can change people’s lives, and shouldn’t be abandoned lightly. As anyone who’s been through it will tell you, the only thing more stressful than actually buying is when the sale falls through at the last moment. But that’s what may happen, especially to buyers on stretched budgets who were counting on this tax break to upgrade to their first family home. 


Thankfully, there’s an easy solution. It’s not another temporary cut - the housing market needs to normalise, not be pumped up by endless short term boosts. The solution is to make the stamp duty cut permanent.


The TaxPayers’ Alliance previously worked out that shifting the threshold to £500,000 would have resulted in an estimated 216,000 more transactions in 2019, equivalent to a 27 per cent increase on transactions worth over £125,000. Some of that would have been a one-off effect of a cut, like the one we had, but the higher threshold would permanently increase transaction numbers by 132,000 a year, or a 17 per cent increase. To put that in perspective, that’s about the same as the total number of dwellings in Nottingham! 


The savings don’t just enable more people to move. The extra up to £15,000 movers will have could be put straight back into the economy, through reworking bathrooms and kitchens, landscaping gardens, or simply buying new furniture. There’s a huge array of jobs and businesses that rely on a bustling housing market - the painting and decorating industry alone is worth £4 billion.


The scale of these benefits shows that the chancellor would be crazy to stop at a temporary cut. Raising the threshold further, for example by ensuring that only millionaires paid, could do even more. Preferably, just abolishing the tax completely would build in huge benefits for homebuyers, productivity and the economy as a whole. In simple terms, it would be a game changer for Britain’s gummed up housing market, preventing thousands of buyers from being shut out. Never mind just solicitors - that would be something we could all celebrate.

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