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“The Government could cut stamp duty and the tax revenue wouldn’t necessarily fall, because it will encourage more moves and in turn more housebuilding,” Mr Clougherty said.

Dominic Agace, chief executive of Winkworth estate agents, added: “Downsizers will be encouraged to make their moves so the housing ladder will be unblocked. With more movers, it also means the overall government tax take will increase.”

There is so far no detail on what form the stamp duty cut will take, but analysts expect a permanent raise in the nil-rate band. Some have speculated that the bands could be adjusted to reflect rates of house price growth. Others anticipate a much larger change to mirror then-chancellor Rishi Sunak’s stamp duty holiday during the pandemic.

Matthew Lesh, of the Institute of Economic Affairs, a think tank, said Ms Truss could increase the nil-rate band to £500,000 or even £1 million.

He said: “If they are going to do something I would expect something substantial with the nil-rate threshold rather than fiddling with exemptions.”

The move would encourage large numbers of older homeowners to move and free up family homes for younger buyers, Mr Lesh added. “Stamp duty contributes to a massive misallocation of housing. It disincentivises downsizing because of the moving costs, which means that other people can’t upsize. A cut would free up the housing market, and get more people selling and moving.”

But analysts warned that reducing buyers’ moving costs could bring unsustainable house price inflation in the short-term.
Andrew Wishart, of Capital Economics, an analyst, said: “By offsetting the rising cost of mortgages, a stamp duty holiday could extend the house price boom by a few months, but that would take prices to a level where a correction would be inevitable.”

How cutting hated stamp duty could solve the nation’s housing crisis

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