Britain’s struggling housing market could be given a much-needed shot in the arm with a six-month stamp duty holiday.
Chancellor Rishi Sunak is expected to announce plans for a temporary exemption for homes at the lower end of the market in the Budget in the autumn.
Treasury officials are looking at raising the threshold at which homebuyers start paying stamp duty.
Currently the levy is not charged on the first £125,000 of the property selling price, with a 2 per cent rate up to £250,000 and 5 per cent on the next £675,000.
The new threshold, which would be put in place for six months to stimulate demand, is likely to be set at somewhere between £300,000 and £500,000.
Chancellor Rishi Sunak could give a much-needed shot in the arm to the housing market with a six-month stamp duty holiday
During the lockdown, Britons were told not to move house. This restriction has now been lifted, but the property market has remained sluggish
First-time buyers are already exempt from paying the duty on homes under £500,000 in London and £300,000 in the rest of the country.
During the lockdown, Britons were told not to move house. This restriction has now been lifted, but the property market has remained sluggish.
Prices fell for the third month in a row in May as coronavirus stalled activity. However, the decline has been modest, with just a 0.2 per cent monthly downturn in values, according to mortgage giant the Halifax.
The fall took the average house price in Britain to £237,808 – 2.6 per cent higher than a year ago.
Figures from HM Revenue & Customs show that sales of homes in April fell to their lowest level since records began in 2005.
There were just 38,060 transactions completed during the month – less than half the number seen at the same point a year ago.
Mr Sunak will give a summer economic update to MPs on Wednesday afternoon, but they will have to wait until autumn for the next full-blown Budget when the stamp duty holiday is expected to be announced.
A huge expansion of apprenticeships is expected to be one of the biggest announcements this week, with all young people expected to be guaranteed the opportunity of one.
The target to get 50 per cent of young people into university is also expected to be abandoned.
To encourage Britons to go out and start spending this summer, Mr Sunak is expected to announce an immediate reduction in VAT for the hospitality industry.
Pubs, restaurants and hotels are likely to benefit from a six-month cut.
Ministers have long been under pressure to take action on stamp duty to help stimulate the market.
Last year when he was chancellor, Sajid Javid was understood to be considering a radical overhaul that would have made sellers pay the levy rather than buyers.
Those in favour of the change had argued that it would help buyers move up the property ladder as they would be paying the duty on the house they are selling rather than on the usually more expensive one they are buying.
However, it would negatively impact property owners looking to downsize.
The suggestion was eventually ruled out by Mr Javid.
It comes as Labour urged the Government to impose a ‘wealth tax’ on the ‘very best off people’ to pay for the coronavirus crisis if the UK economy fails to recover.
Shadow chancellor Anneliese Dodds said the ‘best way’ to pay for the cost of the outbreak would be through economic growth.
But she said if that fails to materialise then ‘those with the broadest shoulders should be bearing more of a contribution’.
She told the BBC’s Andrew Marr Show: ‘The best way to deal with the cost of this crisis is to ensure that our economy grows.
‘If we do that that will erode the value of the debt for as long as interest rates stay low.
‘I think it is really important we recognise that because that will provide the context for any decisions around taxation.
‘It is my view that if we do need to see an increased tax take we shouldn’t see it coming from those low and middle income people.
‘Instead we should have a focus on the very best off people. We have seen a rise in income and wealth inequality over recent years and I think those with the broadest shoulders should be bearing more of a contribution if that contribution is needed.
‘That would only be needed if we are not growing our way out of this crisis.’