Stamp Duty Explained Following the Mini Budget Announcement

On 23 September, the newly appointed Chancellor of the Exchequer, Kwasi Kwarteng, presented parliament with details of his mini budget, which put a strong new emphasis on economic growth, and the element of fear amongst many of us. 

The new policies – which include a reduction in income tax, reversing plans for tax-rises and important changes to stamp duty thresholds – represent something of a gamble for the new chancellor. 

They are intended to kickstart a new era of economic growth, working towards an annual target of +2.5%. However, they entail a huge amount of borrowing, and many industry bodies doubt that the government can balance the books only by stimulating economic growth. Economists have suggested that the spending plans are “unsustainable” and that they must eventually be followed by higher taxes or greatly reduced government spending – and thus, a reduction in public services.


Since the announcement, the value of sterling has fallen sharply, suggesting that international markets and investors remain unconvinced. The Government’s decision to refuse to publish an accompanying impact statement from the Office for Budget Responsibility has not done anything to restore faith.

Nevertheless, the mini-budget and preceding government announcements have contained elements that should certainly work in the investor’s favour. 

Darren Bennett, Co-Founder Fortem Property discusses the relevance of the mini budget announcement for stamp duty and what it means for first-time buyers.

Darren comments: “Perhaps the single most important news to come out of the chancellor’s statement was his decision to change stamp duty thresholds with immediate effect. The new thresholds, for England and Northern Ireland, are as follows:

·       £250,000 for most residential transactions (up from £125,00)

·       £425,000 for first time-buyer transactions (up from £300,00)

·       £625,000 – the value of the property on which first-time-buyers can claim stamp duty relief (up from £500,000)


“Different rates apply in Scotland (where transactions are subject to the Land and Buildings Transaction Tax), and in Wales (the Land Transaction Tax).

“The stamp duty holiday introduced during the Covid pandemic prompted a period of frenetic market activity, during which transaction volumes and average values rose quickly. That was just a temporary suspension, but the new changes are permanent. Whether that permanence is a good thing for investors is hard to tell; the fact that the ‘holiday’ was temporary will have added a sense of urgency to previous transactions, encouraging faster completions and a large spike in activity. When buyers know that the change is permanent, they may feel less anxious about completing quickly.

“Nevertheless, anything that reduces the total cost of a property transaction is likely to be welcomed by house-buyers, and it will leave them with more to spend on their purchases (rather than having to budget for the extra tax payment.) Consequently, it could have a similar effect to the previous stamp duty holiday – i.e., it could fuel faster house price growth”.

Darren continued: “It should also be noted that some of the Government’s other measures will also increase or at least help to preserve people’s spending power. The U-turn on National Insurance payments and the planned new income tax reduction will help more people to retain more of their earnings, and this should have important consequences. First, tenants with more left in their wallets will be better able to pay rents – so there should be less risk of arrears – and, by the same token, they should be better able to keep paying them as inflation forces average rental values to rise.

Second, much the same principle should apply to prospective buyers. Having more to spend, their collective demand for homes should tend to bid up average values, so investors may also see stronger-than-expected capital growth in the coming months”.

Although the Government’s recent economic policy statements have attracted considerable criticism, they have contained plenty that should benefit investors.

Current conditions are by no means ideal. Slow growth and high inflation are never welcome but in the longer term, conditions in the property market are likely to improve. Before the last few weeks’ measures were announced, many households were facing much higher – likely unmanageable – costs. Now, there is more support available, incomes should be less stretched and demand for property should be less hard-hit by the downturn.

On top of all that, the stamp duty changes should support faster house price growth and greater market activity, so prospects for capital appreciation could grow steadily better. 


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