New chancellor Philip Hammond (pictured) has been called upon to suspend stamp duty on the purchase of properties under £500,000 by a leading financial planning expert.
Rachael Griffin, financial planning expert at Old Mutual Wealth, said should the chancellor make such a move it could provide much needed stimulus to the market following the uncertainty caused by the EU referendum.
She said: “The new chancellor could look to suspend stamp duty on homes under £500,000. With the average house price at £282,000 it could provide the required stimulus for the market during a period of exceptional uncertainty.”
Were Hammond to make such a move it would not be the first time a chancellor had done so – and previously it was done to great effect.
Griffin said: “There is a precedent for a Conservative government temporarily suspending stamp duty. In 1991 chancellor Norman Lamont suspended stamp duty for nine months on all properties worth less than £250,000 in an attempt to stimulate the housing market. This resulted in a jump in new mortgage approvals from about 70,000 to about 90,000. It also came in time to help deliver victory for John Major in the April 1992 general election.
“In the financial year 2014/15 HMRC received £7.5bn from residential stamp duty of which 47% came from properties under £500,000, compared to about 64% in 2006/07.
“Suspending stamp duty for property purchases below £500,000 for nine months would cost the Treasury approximately £2.6bn. The new government may see this as an acceptable price to pay in order to keep the property market ticking over.”
Former chancellor George Osborne hiked stamp duty for buy-to-lets and second properties as recently as April with a 3% surcharge.