Watch live: Jeremy Hunt delivers Autumn Statement
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Chancellor Jeremy Hunt revealed the change to housing tax in his Autumn Statement today. It follows a recent cut that means that thousands of homebuyers pay less stamp duty. Jeremy Hunt confirmed in a statement a few weeks ago that a previous cut to stamp duty would remain in place.
But now he has set a date for it to end. He said: “The OBR expects housing activity to slow over the next two years, so the stamp duty cuts announced in the mini-budget will remain in place but only until March 31, 2025.”
Stamp Duty land tax (SDLT) is a lump sum payment you have to make when purchasing property over a certain threshold. Before the cut, no stamp duty was paid on the first £125,000 of any property purchase.
The Government under ex-PM Liz Truss doubled that in last month’s mini-budget – to £250,000 – for all home purchases. The threshold at which the duty was paid for first-time buyers was £300,000. But this increased, to £425,000.
The maximum value of a property on which first-time buyers’ relief can be claimed also increased from £500,000 to £625,000. How much buyers pay depends on the price and type of property, including if it’s residential or non-residential or mixed-use.
An increase to the thresholds at which you pay the tax could save some buyers thousands of pounds. First-time buyers can save up to £6,250. Mr Hunt has now said that this Stamp Duty will come to an end.
In today’s Budget Mr Hunt announced a raft of measures designed to get the economy back on track. His predecessor’s mini-Budget sent the pound plummeting and hit financial markets because tax cuts were unfunded.
Mr Hunt today set out fresh measures that come with costings from the OBR. Mr Hunt was setting out a package of £30billion of spending cuts and £24billion in tax rises over the next five years.
His package is in stark contrast to his predecessor Kwasi Kwarteng’s ill-fated plan for £45billion of tax cuts, less than two months ago, which spooked the markets, pushed up the cost of borrowing and contributed to the downfall of Liz Truss’ short-lived administration.
Mr Hunt said repairing the nation’s finances involved “taking difficult decisions”.
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He told MPs: “Anyone who says there are easy answers is not being straight with the British people: some argue for spending cuts, but that would not be compatible with high-quality public services.
“Others say savings should be found by increasing taxes, but Conservatives know that high tax economies damage enterprise and erode freedom.
“We want low taxes and sound money. But sound money has to come first because inflation eats away at the pound in people’s pockets even more insidiously than taxes.
“So, with just under half of the £55billion consolidation coming from tax, and just over half from spending, this is a balanced plan for stability.”
Although the Stamp Duty cut was good news for homebuyers, the mini-Budget caused market turmoil pushing up mortgage rates. Higher loan rates make it harder to get on the property ladder. Experts also now predict the housing market will cool and house prices could fall next year.
Tomer Aboody, director of property lender MT Finance said: “The Government is maintaining the Stamp Duty reduction for now in the hope that banks can also be more flexible when it comes to mortgages.”
“This will enable the housing market to continue to perform, along with associated businesses within the sector, which is so important for the wider economy.
“This will enable the housing market to continue to perform, along with associated businesses within the sector, which is so important for the wider economy. By the time the Stamp Duty cuts are phased out by March 31, 2025 the UK should hopefully be in a much better place, particularly as long-term interest rates should be lower as inflation is brought under control.”
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Managing Director of House Buyer Bureau, Chris Hodgkinson, claimed that the housing market will continue to suffer.
He said: “A bleak budget for the nation, as the Government ramps up taxes while we stare down the barrel of a 41 year high in inflation. As a result, we can expect the Bank of England to act with a further hike to interest rates in the immediate future and this will put even greater strain on our household finances.
“As it does, we can expect the property market to suffer as buyers can no longer afford to purchase at previous price thresholds, bringing house prices down in the process.
“With changes to capital gains tax we can also expect an influx of stock from hard pressed landlords, who have grown weary of the government’s consistent attacks on their profit margins and are looking to off load their buy to let portfolios. In doing so, this additional stock will also help balance the scale of supply and demand, contributing further to a muted housing market.”
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