Stamp duty has been scrapped immediately for all homes under £500,000, to kickstart the stalled housing market.
Rishi Sunak said the move would benefit nine in ten homebuyers in England and Northern Ireland – saving £4,500 on the average purchase.
The move was announced as part of the chancellor’s emergency mini-budget to head off a feared explosion in unemployment as the coronavirus pandemic bites harder.
Mr Sunak said property transactions had fallen by 50 per cent in May – with the first fall in house prices for 8 years.
The solution, he announced was a “temporary cut until 31 March” raising the threshold for paying stamp duty from £125,000 to £500,000, to kick in immediately.
“Uncertainty abounds in the market – a market we need to be thriving,” Mr Sunak told MPs, adding: “We need people to feel confident.
He added: “The average stamp duty bill will fall by £4,500. And nearly nine out of 10 people buying a main home this year, will pay no stamp duty at all.”
In a package designed to avert a return to 1980s-style mass unemployment, the chancellor also unveiled:
* A £2bn scheme to pay for work placements for hundreds of thousands of 16 to 24-year-olds.
* A £1,000 bonus for every furloughed worker kept on by employers.
* A 10 per cent discount for each meal eaten at a restaurant next month – with VAT on hospitality slashed to 5 per cent until January.
* A £3bn green package, with grants for home-owners and public buildings to improve energy efficiency.
“People need to know we will do all we can to give everyone the opportunity of good and secure work,” Mr Sunak said.
“People need to know that although hardship lies ahead, no-one will be left without hope.”
The bill for the stamp duty axe will be £3.8bn, the Treasury said, with further huge costs for the furlough bonus (£9.4bn) and the VAT cut for hospitality (£4.1bn).
Currently, stamp duty is not charged on the first £125,000 of a property's selling price, with a 2 per cent rate up to £250,000 and 5 per cent on the next £675,000.
Property firms had lobbied hard in recent weeks for housebuying to be made more attractive to boost stagnant demand and prevent widespread job losses.
The chancellor also hopes the knock-on effects – as new buyers employ decorators and buy furniture – will help keep the economy afloat in the difficult months to come.
Carl Emmerson, deputy director of the Institute for Fiscal Studies, acknowledged the cut would benefit the better off, rather than poorer and younger people who rent.
But he added: “Poor and young people who work in sectors that get stimulated indirectly could benefit.”
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