Thursday 9 July 2020 3:29 am

DEBATE: Is Rishi Sunak's stamp duty holiday the right move?

Clive Docwra is managing director of McBains
and Robert Palmer
Robert Palmer is executive director of Tax Justice UK.

Is Rishi Sunak’s stamp duty holiday the right move?

Clive Docwra, managing director of property and construction consultancy McBains, says YES. 

Raising the level where stamp duty tax kicks in to £500,000 is great news for the London property market. 

With the average cost of a home in the capital standing at close to £600,000, we would have liked to see the chancellor raise the threshold to at least this level — allowing more homebuyers to benefit and providing an additional stimulus. Estimates show that house prices in London may fall this year by five per cent, but this will still mean the average price remains at more than £565,000 which could put off some buyers in the capital.

Nevertheless, it will be a real tonic to many prospective purchasers. New sales in London have been lagging as more people look at commuting and moving to the regions instead. 

Despite fears the stamp duty holiday would not start until October, with it being effective now, it could mean a swift revival in sales. And, with it lasting until 31 March next year, it could boost sales during the traditional slower months of activity from November to February.

Read more: Stamp duty holiday: Industry reacts to property tax cut

Robert Palmer, executive director of Tax Justice UK, says NO.

Shelter estimates that up to 230,000 people face eviction when the Covid-19 ban on evicting renters is lifted in August. Many of them will be young people already priced out of home ownership, with their dreams once again dashed by the economic crisis.

So in the midst of this crisis, it was notable to hear the chancellor dump his “whatever it takes” mantra in favour of an expensive and utterly conventional stamp duty cut.

Past evidence shows that a stamp duty holiday is likely to push up property prices further and does nothing to solve the problems with our housing market. Stamp duty is a bad tax, but we need a broader reform of property taxes, rather than this bung to existing homeowners. 

The Summer Statement may have been a literal free meal ticket for some, but by the Autumn Budget Rishi Sunak will need to think much bigger than he did this week.

Read more: Stamp duty holiday: Housebuilder and estate agent stocks jump

Main image credit: Getty

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.