Home buyers will have to ‘wait’ for the mini-budget to find out about a potential stamp duty cut, a Tory minister has said.
Gillian Keegan did not deny reports the new Chancellor Kwasi Kwarteng was preparing to announce it on Friday when asked on Sky News.
The Foreign Office minister also refused to say whether buyers should delay exchanging on a property until next week, which could potentially save them thousands.
‘They’ll have to wait and hear what the Chancellor says on Friday, so obviously I can’t tell people,’ Ms Keegan told presenter Kay Burley. Downing Street has also refused to comment.
Former chancellor Rishi Sunak introduced a temporary stamp duty holiday during the pandemic, triggering a spike in demand as buyers rushed to maximise their savings.
But experts fear another cut risks ‘doing more harm than good’.
Sarah Coles, personal finance analyst at Hargreaves Lansdown, said stimulating housing market demand could push house prices up further.
Reports of another stamp duty holiday will send shockwaves through the property market (Picture: Getty)
Borrowers could find themselves paying higher monthly mortgage costs if the price they pay for their home increases.
Mortgage rates are already on the rise and the Bank of England is expected to hike the base rate further on Thursday, pushing borrowing rates higher.
Ms Coles said: ‘You can see why the Government is concerned about the housing market, because there’s a risk that rising mortgage rates and rising prices will dampen buyer enthusiasm. We know from recent experience that a stamp duty holiday effectively stimulates demand.
‘No buyer will ever complain about a tax cut, but if the Government was to cut stamp duty it would mean ignoring the fact that the real brake on the property market is a severe shortage of supply.
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‘Stimulating demand without addressing supply problems would risk more buyers chasing a tiny number of properties, which would push prices up. It’s what we saw during the coronavirus-inspired stamp duty holiday.
‘By ramping up prices at a time of rising mortgage rates, the end result will be higher monthly mortgage costs, which are going to be increasingly unaffordable. This in itself could be enough to deter buyers, so there’s the risk it could end up doing more harm than good.’
According to ONS figures, the average UK house price leapt by 15.5% in July, marking the biggest increase in 19 years.
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