Election Gimmick Stamp Duty Cut would trigger evictions - claim

A stamp duty cut in the run up to a General Election would see house prices go up and evictions soar, a property industry commentator claims.

Media reports in recent weeks have suggested that Chancellor Jeremy Hunt is considering a pre-election giveaway in the form of a stamp duty cut.

This would be at a further ‘fiscal event’ or mini-Budget after the summer and before any autumn poll.

But Jonathan Rolande, a spokesperson for the National Association of Property Buyers, says: “There is one compelling reason why Jeremy Hunt should consider a Stamp Duty cut – votes. Doing so would immediately put more money into the buyer’s pocket, something agents and sellers would be keen to relieve them of. 

“Activity levels would go up. Prices would begin to increase. Headline writers who see climbing prices as a good thing would write about the feel-good factor returning to the market. 

“Tens of millions of homeowners would see that the value of their asset was increasing. Britain’s builders, carpet fitters, plumbers and electricians would see enquiries rocket as those buying a home started improvements. 

“In the short term, this is indeed a good thing. There will be plenty of work for everyone, and the economy will improve. More people would be more likely to vote Conservative.”

But Rolande warns that while for Hunt this may be ‘mission accomplished’ there could be carnage in the private rental sector. 

“Many landlords would take the chance to offload unloved rental properties, leading to yet more evictions” he forecasts, saying the inevitable demand for housing would give a short-term demand blip but possibly a long-term price increase as buyers outstripped sellers.

Outlining another disadvantage, Rolande adds: “Within a year the bubble will be growing, the Bank of England will worry that things are just too good and will use their blunt tool of interest rate increases to suppress demand again. Rates will increase, the buyers taking advantage of the Stamp cut and anyone with a mortgage will pay more for their money. £2,500 saved on Stamp Duty will, in the end, cost buyers and indeed the country far more.”