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UK stamp duty cut will benefit wealthier and raise inflation, say experts

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theguardian.com

Cuts to stamp duty will hurt first-time buyers and stoke an inflationary bubble in the property market as house prices rise at the fastest rate for almost 20 years, the government has been warned.In the latest report detailing the tax cuts favoured by the prime minister, Liz Truss, the Times said Kwasi Kwarteng, the chancellor, was preparing to launch radical cuts to stamp duty as the “rabbit out of the hat” measure in his mini-budget to the House of Commons on Friday.However, economists and property experts said measures to further stoke an already red-hot housing market would benefit wealthier individuals most and risk pricing-out first-time buyers.It comes less than a year after the expiry of a stamp duty cut used by former chancellor Rishi Sunak during the Covid pandemic, which analysts said mainly benefited London and the south-east and had little impact elsewhere across the UK.“It’s bovine short-termism at its worst,” said Lewis Shaw, the founder of Mansfield-based Shaw Financial Services. “This move will push house prices even higher, worsening inflation and further pricing first-time buyers out of homeownership.“If someone asked me how to drive an already overheated property market into dangerous bubble territory and make things worse for everyone, this policy would be it.”Stamp duty is paid by buyers of land or property in England and Northern Ireland, with higher rates above certain thresholds.

Separate land taxes apply in Scotland and Wales.The reports of a potential cut sent shares in Britain’s housebuilders rising on the London stock market on Wednesday morning, with gains of between 3% and 6% for the FTSE 100 firms Barratt, Persimmon, Taylor Wimpey and Berkeley – among the top performers on the blue-chip

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