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Patient London FTB

Will stamp duty cuts bring a crash?

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Theoretical at the moment I know, but say the govt was to bring down the level of stamp duty to stimulate the market.

Would people agree there's a case for saying this would cause a crash? Stamp duty has put a lot of people off moving so it's held back a lot of property from the market. If it's cut it makes no difference to the amount that buyers will pay, but it means sellers get more of that amount. More people willing to sell equals more chance of a crash right?

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They did this two years ago.

Admittedly the cut was only really significant just above £250k:

e.g. The stamp duty on a £260,000 property was cut from £7,800 to £3,000.

It's hard to say whether this cut had much impact as prices were rising when it was introduced.

I think it would tend to push prices higher as budgets are increased (as you say a smaller amount goes to SDLT). If prices did start to fall, the people who based their selling on SDLT would come off the market.

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16 hours ago, Patient London FTB said:

Theoretical at the moment I know, but say the govt was to bring down the level of stamp duty to stimulate the market.

Would people agree there's a case for saying this would cause a crash? Stamp duty has put a lot of people off moving so it's held back a lot of property from the market. If it's cut it makes no difference to the amount that buyers will pay, but it means sellers get more of that amount. More people willing to sell equals more chance of a crash right?

SDLT is levied on the buyer not the seller. If it is lowered then the natural reaction of a seller would be to put their prices up to rake in the additional effective spending power of potential buyers.

 

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9 hours ago, goldbug9999 said:

SDLT is levied on the buyer not the seller. If it is lowered then the natural reaction of a seller would be to put their prices up to rake in the additional effective spending power of potential buyers.

 

Stamp duty cannot be put on the mortgage. 

So the buyer needs to find deposit + stampduty to get the mortgage.

Increasing the stamp duty is a very effective way to quell demand and reduce prices.

So no they should not reduce it, if anything it should go up.

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