A six-month stamp duty holiday could be introduced by the Government in a bid to boost the struggling housing market.
The threshold at which people start paying the property tax is £125,000, but it is thought Chancellor Rishi Sunak will raise this when he delivers the autumn budget. The new limit would be in place for six months to make it easier for people to buy a home and is expected to be anywhere between £300,000 and £500,000.
Currently first-time buyers are exempt from stamp duty on homes under £500,000 in London and £300,000 in the rest of the UK. When Boris Johnson
urged the public to stay at home and avoid all non-essential travel in late March, the housing market took a hit and has been slow to recover since.
According to the Nationwide house price index for May, house prices fell by 1.7% from the previous month – the largest drop in for 11 years. HM Revenue & Customs figures show sales of homes in April fell to their lowest level since records began in 2005.
Only 38,060 were completed in the month – less than half during that same period last year. Now people are allowed to move homes again the the market has been reestablishing, but progress has been sluggish. Economist at PwC James Durham said: ‘It’s good news that estate agents and property websites have reported a significant increase in enquiries since restrictions on the housing market were lifted, due to the pent up demand.
‘However, with considerable uncertainty in the economy, we still expect many people to put off making any major financial decisions until the outlook is clearer. This is likely to dampen the number of transactions that take place over the coming months, meaning a swift bounceback of the housing market is unlikely.
‘Brexit is still on the horizon and a ‘no deal’ may put further downward pressure on house prices, both before and after the transition period ends on 31st December.
‘Looking ahead, rising unemployment and the risk of redundancies is likely to have a negative impact on the housing market over the coming months.’
The Chancellor is expected to give an update on the economy in Parliament on Wednesday, but it is thought the stamp duty holiday wouldn’t come in until he announces the autumn budget.
In a bid to get people spending their money over the summer and get the economy pumping again, Sunak is expected to introduce a temporary cut in VAT for pubs, restaurants and cafes to help protect the 2.4 million jobs in the hospitality sector, which has taken a hammering due to the coronavirus
Britain’s hospitality and tourism sector has called for ‘urgent’ support from the Prime Minister, with around 120 bosses signing an open letter asking for aid and investment.
They are demanding a reduction in VAT and other tax and for some rent to be covered through grants in order to prevent ‘widespread devastation’.
This week Sunak is also set to announce £111 million in funding for apprenticeships, with the aim of every person aged 16 to 24 having access to one.
Young people will get a work placement for between six weeks and six months and employers will be granted a £1,000 bonus for each recruit they take under their wing.