Shares in British homebuilders rose sharply after the government stated that it would cut stamp duty – a tax on property purchases – in a mini-budget. Such a move would be a major fillip for the housing sector, which has shown signs of cooling this year amid rising inflation and interest rates.
The UK housebuilders’ index rose 3.2 percent, with FTSE 100 stocks Barratt, Persimmon Taylor Wimpey, and Berkeley all gaining between 2.6 percent and 4.7 percent, placing them among the top percentage gainers in the blue-chip index.
The newly appointed Prime Minister Liz Truss would announce radical plans to cut stamp duty in the government’s mini-budget this week in an attempt to drive economic growth.
The UK housebuilders’ index, which has lost more than 43% so far this year, rose 4.1%. FTSE 100 stocks Barratt, Persimmon, Taylor Wimpey and Berkeley climbed between 3.2% and 6%, among the top percentage gains on the blue-chip index.
CMC Markets analyst Michael Hewson said housing stocks were getting a boost but added rising interest rates and the worsening cost of living were offsetting factors. “It can’t hurt but the devil will be in the detail,” Hewson added.
Peel Hunt analyst Sam Cullen said any stamp duty cut could help housebuilders better offset inflation in building costs, which have been largely cushioned by higher house prices. The plan to cut stamp duty would be part of new Prime Minister Liz Truss’s drive to boost economic growth.
A temporary stamp duty cut was used to support the market by previous finance minister Rishi Sunak during the COVID-19 pandemic. Currently, no stamp duty is paid on the first 125,000 pounds ($141,650) of any property purchase.