Agents and other property professionals have, perhaps unsurprisingly, reacted positively to rumours of a Stamp Duty cut.

Prime Minister Liz Truss and Chancellor Kwasi Kwarteng are reported to be planning to include a reduction in Stamp Duty in the mini-Budget to be unveiled on Friday.

The news has already sparked concern among buyers and sellers already in property chains, with some questioning on social media if they should delay completion until an announcement is made.

It comes as HMRC data yesterday showed property sales continued to increase during August.

There are no further details as of yet on whether the cut would be permanent or temporary and to who it would apply.
Agents may fondly remember the busy period of the Stamp Duty holiday during the pandemic, although some critics now blame that for driving up prices and the shortage of stock the market now faces.

Some agents are instead suggesting that any Stamp Duty cut should be targeted rather than being implemented across all types of buyers and price brackets.

Lucian Cook, head of residential research at Savills, said the Government may be hoping that a cut will offset the impact of increases to the cost of living and more expensive mortgage pricing.

He said: “In an ideal world, we would have liked to have seen the Government take the opportunity to look at how changes to Stamp Duty could address specific issues in the housing market.

“Firstly, they should consider a targeted relief for downsizers - perhaps similar in scale and design to that available to first-time buyers - in order to remove one of the barriers to more efficient use of our existing housing stock. 

“Secondly, they should look at lower rates of Stamp Duty on the purchase of more energy efficient homes, particularly as housing remains the problem child of reducing our carbon emissions. That would further encourage existing homeowners to undertake improvement works before the point of sale.”

The National Association of Property Buyers, which has long called for a reduction in Stamp Duty rates, agreed that it should be targeted.

Its spokesman Jonathan Rolande suggested the zero-rate threshold for first-time buyers should be increased from £300,000 to £350,000 and said pensioners should get support to downsize, adding: “Although fuel bills have now been capped at a more affordable level, there are still many pensioners living in large family homes that will find them increasingly hard to maintain and keep warm. 

“To encourage them to sell, freeing up much-needed bedroom spaces in family homes, I’d like to see targeted Stamp Duty relief for retired people trading down market, say from a 4 bedroom detached to a 2-bed property. 

“Where the number of bedrooms is being reduced, Stamp Duty could be zero on the smaller purchase saving £7500 on a £350,000 purchase. Additionally, rates should be reduced in areas that require regeneration, encouraging investment exactly where it’s needed the most.

“A healthy property market is key to a successful economy. I hope that we will not see blanket tax cuts that will further fuel the market that, even cooled in the last few months, is still red-hot.”

There are warnings that a cut could increase house prices in the short term.

Tom Bill, Head of UK Residential Research at Knight Frank, said: “Nobody can accuse the new Government of lacking an economic vision. If its low-tax approach extends to Stamp Duty, recent history tells us it will trigger higher levels of demand in the housing market at a time when mortgages are getting more expensive, which will support social mobility. 

“Prices could spike higher in the short term if supply initially struggles to keep up but more balanced conditions will return provided the cut is immediate and permanent.”

Rightmove data shows that 60% of properties listed on the portal are currently in the £250,001 to £925,000 Stamp Duty price bracket, with 26% in the £125,001 to £250,000 range.

The average stamp duty that a home-mover, not a first-time buyer, pays is currently £8,258, based on an average asking price of £365,173, Rightmove said.

Its figures show 7% of homes on the market are currently exempt from the property tax as they are listed for below £125,000, while 45% are below £300,000, so first-time buyers wouldn’t have to pay the charge.

Rightmove’s analysis suggests that If the stamp duty cut was on all properties up to £500,000, it would mean 74% of properties in England would be exempt from stamp duty.

Tim Bannister, property expert for Rightmove, said: “With demand starting to soften slightly over the past few months, and headwinds anticipated to grow as 2022 draws to a close and we enter 2023, any help to reduce the cost of moving will no doubt be welcomed by buyers if a Stamp Duty cut is announced on Friday.

“Sellers who may have been considering listing their property for sale may be encouraged to push on with their plans given the potential for increased demand, in turn bringing much-needed stock to a currently supply-constrained market. 

“If the cuts benefit homes in higher price brackets it would help those trading up more than it would help first-time buyers. With rising interest rates and cost of living it could be welcome to those looking for a bit more buffer to find the home they want, but if prices rise further then that extra money could quickly be swallowed up.

“The impact on supply, demand and ultimately prices will depend on the detail, including if it will it extend to second-home buyers and investors.”