Stamp Duty Cut would trigger evictions and price rises - claim

A stamp duty cut would see house prices go up and evictions soar, a property industry commentator claims.

Reports in the past two weeks have suggested that Chancellor Jeremy Hunt is planning to reduce stamp duty at a further ‘fiscal event’ or mini-Budget after the summer. 

But Jonathan Rolande, a spokesperson for the National Association of Property Buyers, says: “There is one compelling reason why Jeremy Hunt should consider a Stamp Duty cut – votes. Doing so would immediately put more money into the buyer’s pocket, something estate agents and sellers would be keen to relieve them of. 

“Activity levels would go up. Prices would begin to increase. Headline writers who see climbing prices as a good thing would write about the feel-good factor returning to the market. 

“Tens of millions of homeowners would see that the value of their asset was increasing. Britain’s builders, carpet fitters, plumbers and electricians would see enquiries rocket as those buying a home started improvements. 

“In the short term, this is indeed a good thing. There will be plenty of work for everyone, and the economy will improve. More people would be more likely to vote Conservative.

“For Mr Hunt, that alone may be ‘mission accomplished’. But what would come next? The match will have been lit; demand drives prices. The more money buyers have, the more they will spend - who doesn’t buy a property at the top of their budget?

“The small gain from a reduced Stamp Duty bill would evaporate quickly as competition for each home and therefore the price, goes up. Many landlords would take the chance to offload unloved rental properties, leading to yet more evictions.”

Outlining another disadvantage, Rolande adds: “Within a year the bubble will be growing, the Bank of England will worry that things are just too good and will use their blunt tool of interest rate increases to suppress demand again. Rates will increase, the buyers taking advantage of the Stamp cut and anyone with a mortgage will pay more for their money. £2500 saved on Stamp Duty will, in the end, cost buyers and indeed the country far more.”