Important:

This article is for information purposes only.

Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.

There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.

Research finds extension of stamp duty holiday beneficial

stamp duty holiday

Since July 2020, a stamp duty holiday has been in place for properties below £500,000 which is currently scheduled to end on 31 March 2021

Keeping the property stamp duty threshold at its current level of £500,000 could generate a fiscal surplus of up to £139m, according to research commissioned by Kensington Mortgages.

The study, conducted by the Centre for Economics and Business Research found that higher transaction volumes, increased property prices, household consumption and overall housing market activity created by extending the stamp duty holiday could lead to the fiscal surplus.

It says that if the threshold was lowered to £450,000, the net increase in tax revenues could rise to £247m, while decreasing the threshold to £300,000 could lead to a surplus of £491m per year.

Since July 2020, a stamp duty holiday has been in place for properties below £500,000 – which make up nearly 90 per cent of transactions in England and Northern Ireland. The stamp duty ‘holiday’, which has been in place since July 2020, is currently scheduled to end on 31 March 2021.

Kensington Mortgages chief executive Mark Arnold says: This research demonstrates what we all intuitively know – that the stamp duty holiday has been very positive for the economy at a critical time. The threshold level should be considered ripe for permanent reform.

The upper bound estimates of our analysis suggest that the Treasury could have its cake and eat it, achieving a fiscal surplus whilst boosting the economy. It could unlock housing market activity and pay for 4,000 additional nurses [per year] in one fell swoop, Arnold said.

He said that furthermore, aside from updating the threshold to reflect real world house prices, the maintenance of the £500,000 threshold could address some structural problems with the UK housing market. It could lead to greater regional mobility – with ancillary trickle-down benefits – as well as also stimulate more downsizing, freeing up family homes and helping to address this vital stock shortage.

Important:

This article is for information purposes only.

Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.

There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.