An increase to stamp duty payment bands in 2024 would “stimulate activity at the lower end of the property market”, according to Cornerstone Tax group chairman, David Hannah.
Hannah explained that stamp duty land tax payment bands have been “long overdue” an overhaul as they have never been index-linked to house price inflation.
He added that increasing the thresholds would allow first-time buyers to reduce the amount they need to borrow and would, as a result, improve their affordability calculations.
“As we all know, a rising tide lifts all boats, those looking to purchase properties on the mid-to-high end of the property market will now have a chance to sell their low end properties as a result of the increase in demand from prospective buyers,” he explained.
This would, therefore, contribute to further momentum within the housing market.
Interest rates
Hannah's prescriptions for the upcoming year were not limited to stamp duty as he also shared his thoughts on interest rates.
Hannah asserted that the Bank of England ought to look towards cutting the base rate in the new year, in a bid to prevent a collapse in customer demand and encourage lenders to pursue further cuts to mortgage rates.
“Economies have momentum, with the rate of inflation continuing its downward trajectory of 2 per cent - the Monetary Policy Committee must look ahead to the new year and start thinking about the optimum time to cut rates,” he stated.
Additionally, Hannah urged the MPC to “seriously consider” cutting the interest rate in their next meeting as, even a reduction by a quarter percentage point would signal optimism within the UK economy.
However, a target base rate of 3-3.5 per cent as the overall goal would show that the BoE “wants to truly prioritise prospective buyers in the new year,” he added.
Supply challenges
Following an investigation by the BBC in 2023 revealing that the supply of rental homes in the UK had fallen by one-third in the past two years, Hannah also shared his thoughts on the supply issues facing the market.
He advised that it would “make sense” for the chancellor to suspend, or even abolish, the 3 per cent surcharge where properties are being acquired for private rental sector investment.
Removing this measure would, according to Hannah, encourage landlords to increase their holdings, rather than exit the market.
This would, therefore, reverse the decline in supply of rental homes and potentially expand it to the point where demand no longer outstrips supply.
tom.dunstan@ft.com
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