Savills comments on the Chancellors stamp duty cuts

Savills analysis reveals the biggest beneficiaries of the stamp duty changes are likely to be first time buyers in London and the more expensive parts of South East England, where the savings on offer will make their deposit requirements look a little less daunting. However, given a combination of recent house price growth and increases in interest rate raises this is not going to magically result in a surge of first time buyer home buying activity.

Average savings for first time buyers:

Similarly, a maximum up front stamp duty saving of £2,500 for other buyers, is relatively small in relation to the additional annual mortgage costs seen since the beginning of the year. And as the cut is permanent it is unlikely to bring the same urgency to the market as the recent stamp duty holiday.

The changes will undoubtedly be welcomed by those in the process of buying. But in the short term, they are unlikely to result in a further spate of house price growth and instead are more likely to temper the effect of the wider economic headwinds facing the housing market.

Average savings for home movers:

Source: Savills Research using Land Registry

The reality is that this will not hugely dent revenues for the Treasury, given the extent to which stamp duty receipts are driven by higher value sales that are likely to be supported by the decision to cut the top rate of income tax. Those revenues will also have been protected by the failure to raise other stamp duty thresholds in line with the recent price growth.

Overall, it feels that an opportunity has been lost to introduce more targeted measures to free up barriers to downsizing and encourage people to improve the energy efficiency of their home through differential rates of tax.