0% Stamp duty threshold increasing to £500k

[Rebelwithallthecause]

Just seen the news that the chancellor is due to announce temporary change to stamp duty to help things along which will mean houses under £500k will pay now tamp duty

Not too sure how long this will run for but maybe a few years

Will this change your mind on if you stay out or sell?

We had been looking to love but started considering staying and extending but this would mean a big saving and might mean that more buyers would be interested in ours too

I must admit, I’m finding Rishi Sunak’s brand of cowboy economics absolutely hilarious :) I’m willing to bet he’s a big fan of Oprah.

With a recession looming and tens of thousands of job cuts already announced, with plenty more on the way, our chancellor has decided to encourage people to take on the biggest debt they can (mortgage) and buy a house!

Yes, forget the fact that every economic indicator is saying GDP will shrink by at least 8% this year and hundreds of thousands, if not millions, of jobs are going to be lost, please please please for the sake of the Conservative party’s donor base, borrow as much as you can from a bank and spend like there’s no tomorrow.

Good luck folks. Buckle up.

@newbie111
I know it is funny,I actually think we are heading into a depression never mind a recession and the chancellor is titting about spending money on reduced stamp duty.

@GrumpySausage good luck tomorrow! I am in the same position with a bit less to save but hopeful all the same x

For those of us with jobs less likely to be under threat though, and with no alternative apart from renting, this stamp duty holiday is going to be a nice saving.

Any idea if the stamp duty holiday would count for second homes? I inherited a house a family member lives in that I can't sell (it's been their home their whole life and I wouldn't want to disrupt that, is been adapted for them and they need extra support to live independently and can't just pack up and move) but it means I'm liable for the second home stamp duty when my husband and I buy a house. If the stamp duty holiday counts for second homes it would save us thousands.

@newbie111 Hmm... I feel it's a little unfair to call it "Rishi Sunak’s brand of cowboy economics".

It's not like Rishi Sunak is a novice to Economics - he seems pretty well qualified and has some industry experience (that's not to say he can't make mistakes though, of course). His wikipedia summarises it as: "Sunak subsequently studied Philosophy, Politics and Economics (PPE) at Lincoln College, Oxford, and later gained an MBA from Stanford University as a Fulbright Scholar. After graduating, he worked for investment bank Goldman Sachs and later as a partner at hedge fund management firm The Children's Investment Fund Management." en.wikipedia.org/wiki/Rishi_Sunak

I'm not an economist, but I recall in another thread that you said you were. So, out of curiosity - if you were Chancellor, then what would you do under the current circumstances?

"With a recession looming and tens of thousands of job cuts already announced, with plenty more on the way, our chancellor has decided to encourage people to take on the biggest debt they can (mortgage) and buy a house!"

Fair point... but - surely, if this stamp duty is only for 6 months starting tomorrow, then it's likely those buying a house were already in the process or teetering on the verge of buying a home anyway. People still need somewhere to live. A stamp duty holiday will help those buyers save money - which in turn will likely mean they have more money to spend on home improvements and/or furnishings. Swings and roundabouts?

Also, those impacted by job cuts are unlikely to be the ones who will be able to secure a mortgage anyway...

@ChocoTrio

I'm a quant, not an economist btw - and Rishi isn't an economist either.

Managing a portfolio and running a country's economy are two very different things. In fact, I wouldn't trust anyone in investment banking (including myself!) with it since we've all been indoctrinated with the "leverage (and greed ) is good" philosophy.

What would I do differently? Spend money on growing the economy.

I don't mean "paper" growth i.e., quantitative easing for driving up the stock markets and or stamp duty cuts to inflate house prices.

If the money being spent was instead focused on building houses and other required infrastructure, invested in education and research, tax breaks for SMEs etc., we would actually be investing in growing the country's GDP the right way and the effects of this growth would improve everyone's lives.

@Oopsiedaisyy
No I agree with you.Should not mean the seller can add a penny to the price though

Does anyone know if this is only applicable in England? What about Wales?

@newbie111 unfortunately for dear rishi, his voter base is made up of people who think their £1 million house is their pension and people who bought a 500K house in the past 5 years. Both groups may regard it as a government failing if their house value drops. Many of these people (particularly in the second group) may not have worked out that it might be easier for them to upsize if property prices went down as long as they are not in negative equity (if you ask me, what rishi is doing is inflating property prices, not preventing people from falling into negative equity). Or possibly they may have upsized prior to this.

The problem with western style democracy is you are only thinking within 5 year timeframes and your voter base. 65% of the british population are home owners. I dont have the stats but I would be surprised if the percentage of Tory voters who are home owners wasn't in the high 90s.

@newbie111

I appreciate what you're saying about Investment Banking being unsuitable due to its philosophy - it's very insightful, thanks.
Being a bit of a devil's advocate here... what exactly do you feel makes someone an Economist? I would have thought an Oxford education in Philosophy, Politics and Economics (PPE) would have given Rishi a sound foundation in the Economics within a political context? Other former Chancellors have had PPE as their foundational education (e.g. Philip Hammond).

"What would I do differently? Spend money on growing the economy."

I actually think that's much easier said that done.

Example..."If the money being spent was instead focused on building houses"... then those houses would still need to be bought. A stamp duty cut would assist buyers.

I disagree that the stamp duty will solely inflate house prices - it might be a side effect, but I'm not sure how much it can inflate prices in just 6 months?

Like @Oopsiedaisyy said - stamp duty would be a massive savings for a lot of people and that will enable them to create growth in the economy elsewhere - spending in stores etc.

Stamp duty currently restricts movement and it makes sense to try and create more movement. I get the impression this stamp duty holiday is just to reboot the housing market after lockdown - and well advised too.

*easier said than done

You too @jelly79

Jumping on this thread in anticipation of today's announcement.

We're buying at £525k. We viewed as soon as lockdown restrictions allowed and agreed to pay full guide price because we have been searching for years and this is just right for us. Solicitor thinks we can complete this month, although I think that's optimistic and it will be August.

We aren't selling and will be renting our current home out, so I don't suppose the relief will apply to second homes anyway (which is fine, that's all part of having an investment property). However if that's not the case I'll be pissed off if this isn't implemented until autumn because our vendors won't be able to wait.

Stamp duty currently restricts movement and it makes sense to try and create more movement.
It does but I think it also puts the brakes on the housing market especially in London. It's already very difficult for first time buyers to buy. I read a thread , a couple of posters couldn't save faster than house prices were moving up. I think what will happen is that asking prices will move up and people won't save anything.

Same as us @isthheresomethingwrongwithme. We sold our house in October 2019 and our buyers have been infinitely patient (luckily no chain and first time buyers) but if the stamp duty cut isnt implemented until the autumn, I very much doubt they'll want to wait until then to complete. There will be no financial benefit to them so no benefit to waiting.

In that case we'll just have to suck it up, but it'll be very galling! I've already spent that 6k saving on a new bathroom in my head!

our chancellor has decided to encourage people to take on the biggest debt they can (mortgage) and buy a house!

Newbie what help is available for first time buyers already re stamp duty? Is this more to activate people already owning. Also how much will getting a mortgage reflect increased risk atm

I thought business rate cuts were implemented.

I have no issue with Sunak other than inwardly feeling the weight of each billion announcement but he’s plugging holes atm (arts, youth etc).

If this is only for 6 months it will actually put us off moving. We won’t be able to move within that period but wanted to move early next year. I am not willing to pay full stamp duty and the inevitably higher prices this will cause so we will just stay in this house.

It’s a big release for many, the only thing will be people falling each side. Just completing, last week for example, that would be tough, also six months quite short, people will have to get a move on.

@Pickpick101
"I think what will happen is that asking prices will move up and people won't save anything."

I suspect it will be harder for sellers already listed on the market to suddenly start increasing their prices in responses to a stamp duty cut. I guess that if they too are moving then they will benefit from the stamp duty cut as well, so it'll be swings and roundabouts.

With a recession looming and tens of thousands of job cuts already announced, with plenty more on the way, our chancellor has decided to encourage people to take on the biggest debt they can (mortgage) and buy a house!
Presumably though the opposite is also true - if people need to liquidate their biggest asset or downsize due to economic uncertainty or job loss this would help them as well?

I completed a week ago today 🤦🏻‍♀️

@Mirrorxx

"I am not willing to pay full stamp duty and the inevitably higher prices this will cause so we will just stay in this house."

It's not inevitable that it will cause higher prices. It's possible - and maybe likely - but not inevitable. As in my above post - I suspect it will be harder for sellers already listed on the market to suddenly start increasing their prices in responses to a stamp duty cut. I guess that if they too are moving then they will benefit from the stamp duty cut as well, so it'll be swings and roundabouts.

I reckon if it's cliff edge they'll find a way around it eg. You pay 499 for the house and 26k for additional fixtures and fittings

Any saving I make in stamp duty will go straight into paying for renovations, so in my case it will benefit local, small businesses.

I'm not sure I understand the correlation between no stamp duty and higher house prices. It's none of my vendor's business how much money I have access to. Your house isn't suddenly worth £8k more just because I happen to have saved £8k elsewhere. Many sellers will be buying another property and potentially benefitting too.