Recently, in the UK government's Autumn Budget, the news of an increase in stamp duty on second homes attracted a lot of attention. However, unexpectedly, this policy adjustment may stimulate the home-buying boom, making the UK's home sales volume is expected to jump significantly early next year.
It is learnt that Nationwide, a British bank, pointed out in its prediction released on 1 November that the adjustment of the stamp duty policy in the government's budget may bring about a home-buying boom. In fact, in order to stimulate the property market, the UK government had adjusted the stamp duty policy in September 2022, raising the threshold of stamp duty payment from £300,000 to £425,000 for first home buyers and from £125,000 to £250,000 for non-first home buyers.
However, in the Government's Budget on Wednesday, Chancellor of the Exchequer Reeves announced that from 31 March 2025 the stamp duty payment threshold will revert to its previous level. This means that the preferential stamp duty relief for first home buyers will disappear on 31 March next year and homebuyers will have to pay more stamp duty.
Nationwide expects this policy change to affect around one in five first-time buyers in the UK. For homebuyers who are about to lose their stamp duty benefits, they may be tempted to speed up their purchases to avoid higher tax bills in the future. This may be a key reason for the boom in house purchases.
It is also worth noting that the impact of the new policy varies across regions. For areas with lower house prices, such as Northern Ireland and the North of England, the impact of the New Deal has been relatively small, while for areas with higher house prices, such as London and the South East of England, the impact of the New Deal has been more significant.
