The Chancellor has signalled he may cut the tax for first time buyers. It would be a fig-leaf for the fact they've shelved their housing programme.
If we’re to believe a cut in stamp duty is in the pipeline, it may be a signal that Philip Hammond’s ‘bold’ budget is off the cards — and with it any likely solution to the housing crisis.
Philip Hammond is drawing up plans to cut stamp duty for those buying their first home in his Autumn budget according to government aides, reports the Financial Times today.
If the rumours are correct, it would likely signal the Tories have ditched the ambitious housing programme proposed by Savid Javid in October — and a cut in stamp duty is to be offered to the public as a rather meagre substitute.
A month ago the communities secretary was arguing the government should borrow £50bn to build hundreds of thousands of new homes.
Government sources were saying the Chancellor would be writing a ‘radical budget, something that is a big offer to the nation’.
And Theresa May vowed to fix the “broken housing market” by adding an extra £2bn-a-year to the affordable homes programme — further it was believed the PM backed Javid’s more wide-ranging plan.
But with ministers disagreeing over Javid’s housing proposals, and the Chancellor himself failing to support them when asked in the House of Commons, the mood has changed in Westminster in the intervening month.
If a cut in stamp duty is to be offered in place of real housing reforms, it would seem the ‘big offer’ is off the table and austerity and deficit cutting will likely remain the priorities in Philip Hammond’s budget next week.
If all we are offered on housing is a cut in stamp duty for first time buyers, it’s going to achieve a great deal.
Firstly, stamp duty only applies to properties worth over £125,000. In many parts of England, average house prices are below this figure. So, the cut will mostly benefit first time buyers in London and the South East.
Secondly, house prices are likely to rise to compensate for the money saved by buyers with a cut in stamp duty. So it’s not actually going to save anyone any money.
Cutting stamp duty would fail to make any dent in our extremely unequal housing market and would signal the Tories have failed to come up with any better ideas on solving the housing crisis.
Oscar Webb is a staff writer for Left Foot Forward. He tweets here.
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