What's happened
Starting October 31, the stamp duty surcharge for second-home buyers in England and Northern Ireland will rise from 3% to 5%. This change aims to support first-time buyers but may lead to higher rents and reduced rental property availability, according to analysts and industry experts.
Why it matters
What the papers say
According to BBC News, the stamp duty surcharge for second-home buyers will increase from 3% to 5% starting October 31, 2024. Chancellor Rachel Reeves stated this move aims to support first-time buyers, potentially facilitating over 130,000 transactions in the next five years. However, Paul Johnson from the Institute for Fiscal Studies expressed concern that this policy could lead to higher rents as landlords may withdraw from the market due to increased costs. Ben Beadle of the National Residential Landlords Association echoed this sentiment, stating that the government has ignored warnings about the negative impact of higher taxes on the rental market. In contrast, Ben Twomey from Generation Rent argued that the surcharge would benefit first-time buyers by making it easier for them to compete against investors. The Independent also highlighted the potential for increased costs for renters as fewer properties become available, emphasizing the conflicting views on the policy's effectiveness.
How we got here
The increase in stamp duty comes as part of Chancellor Rachel Reeves' budget announcement, which aims to reform the housing market and raise revenue. The current thresholds for stamp duty were temporarily raised under previous administrations but are set to revert in March 2025.
Common question
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Rachel Jane Reeves is a British Labour Party politician serving as Shadow Chancellor of the Duchy of Lancaster and Shadow Minister for the Cabinet Office since 2020. She has been the Member of Parliament for Leeds West since 2010.
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Kirstie Mary Allsopp is a British television presenter, best known as co-presenter of Channel 4 property shows including Location, Location, Location, Love It or List It UK, Relocation, Relocation and Location Revisited.
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Elizabeth Mary Truss, known as Liz Truss, is a British politician serving as Secretary of State for International Trade and President of the Board of Trade since July 2019 and Minister for Women and Equalities since September 2019.
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The Institute for Fiscal Studies is an economic research institute based in London, United Kingdom, which specialises in UK taxation and public policy. It produces both academic and policy-related findings.