In a move criticized as “desperate” by a senior minister, Kemi Badenoch’s proposal to eliminate stamp duty has drawn parallels with Liz Truss’s past actions. Pat McFadden, the Secretary of State for Pensions, accused the Conservative Party of introducing tax changes without proper funding and failing to heed the lessons from Truss’s previous budgetary missteps.
During a lackluster party conference, the Tory leader announced plans to abolish Stamp Duty, labeling it as a burdensome tax hindering the housing market. McFadden criticized the Tories for repeating past mistakes of announcing unfunded tax cuts, highlighting the repercussions of their actions in 2022.
Badenoch’s announcement at the Tory conference revealed that the stamp duty abolition would only apply to primary residences, still affecting second homes, properties purchased by businesses, and overseas buyers. The policy change is expected to benefit those purchasing high-value properties the most, as Stamp Duty exemptions extend up to £125,000 for homes.
First-time homebuyers, on the other hand, are already exempt from stamp duty for properties below £300,000. The projected cost of the plan, estimated at £9 billion annually by the Tories, is intended to be covered by £47 billion in spending reductions across welfare, foreign aid, and civil service size. However, economists caution that the proposed cuts are ambiguous and challenging to evaluate.
Experts argue that while scrapping stamp duty may be popular and stimulate the property market, it could also lead to inflated house prices, potentially nullifying any benefits for first-time buyers. Stuart Cheetham, CEO of mortgage lender MPowered, emphasized the potential risks of rapidly rising prices eroding savings for new buyers. Lucian Cook, head of residential research at Savills, warned that eliminating stamp duty could simply result in price increases rather than direct savings for buyers.
This move has reignited debates surrounding the impact of stamp duty on property purchases and the broader implications for the housing market.