Stamp duty cuts to increase property sales – but by how much?

The latest cuts to stamp duty could help boost the number of transactions seen across the property market by 26%, according to research from estate and lettings agent Barrows and Forrester. 

Last week, the government announced the previous stamp duty land tax threshold payable between £125,000 and £250,000 would be scrapped, while the tax will only be due for first-time buyers purchasing a property worth £425,000 or above.

The initiative is expected to see homebuyers come flocking back to the market, as they did in the wake of the stamp duty holiday during the pandemic. The Barrows and Forrester research analysed the level of transactions seen during that holiday and how they compared to the same 15-month period prior.

The figures show that across England, 923,498 homes were sold in the 15 months prior to the stamp duty holiday, an average of 61,567 per month. During the 15 months a stamp duty saving was in place, this climbed to 1,167,600 homes sold, or 77,840 per month – an increase of 26%.

Regionally, the South East could be in line for the biggest boost to housing market activity, having seen a 36% uplift in sales volumes during the previous stamp duty holiday.

In London, the previous stamp duty holiday boosted property sales by 35%, while the East of England (31%) and the South West (30%) also saw some of the largest increases.

Even in the West Midlands, where the stamp duty saving inspired uptick in market activity was at its lowest, the number of homes sold still climbed by 17% versus the same time prior.

At local authority level, the level of homes sold in both the New Forest and Elmbridge climbed by a huge 58% following the previous stamp duty holiday, with Brentwood (55%), Maidstone (52%), Woking (52%), and Mid Suffolk (52%) also seeing some of the largest increases in market activity.

Read more: UK government cuts stamp duty tax.

“Many of us within the property industry remain highly sceptical about government initiatives that focus solely on fuelling the furnace of demand while doing very little to address the issue of supply,” James Forrester, managing director at Barrows and Forrester, commented. “So, in this respect, the latest stamp duty changes are just more of the same tired, recycled thinking by the government.

“However, despite the long-term impact these cuts will have on topline housing affordability, there’s no doubt they will act as a tantalising carrot to current homebuyers, tempting them back to the market after initial signs that the pandemic property market boom was starting to ease.

“We’ve already seen what a stamp duty saving can do in terms of boosting market activity, and so we can expect to see more of the same, albeit at a perhaps less frantic pace as there is no expiry date on the tin, as it were.”