Liz Truss will announce radical plans to cut stamp duty in the government’s mini-budget this week in an attempt to drive economic growth. Truss believes that cutting stamp duty will encourage economic growth by allowing more people to move and enabling first-time buyers to get on the property ladder.
Truss is also considering bringing forward plans to cut income tax by 1p in the pound from 2024 to next year, although this is likely to be reserved for a full budget before the end of the year.
The new PM is gambling an awful lot on trickle-down economics, hoping that tax cuts that benefit the wealthy will ultimately also help others in time.
Stamp duty is a case in point and changes will at first assist those purchasing at higher levels which they hope could free up stock further down the chain as people move.
Stamp duty as a concept has been ripe for reform for many years and we can only hope that any change will be well-thought out and permanent rather than another debilitating “holiday” period that adds further fuel to an already raging fire.
Whatever the change, in the short term property prices usually move up to swallow the stamp duty saving, which helps no one, certainly not first time buyers facing into rapidly rising mortgage rates and cost of living increases. Get it right however, and in the medium to long term we may just see a market with more transactions rather than one where stamp duty acts as a further disincentive to move.