Chancellor Kwasi Kwarteng’s announcement of new stamp duty cuts received a mixed reaction from the mortgage market with some suggesting it is one of the chancellor’s “crowd-pleasing tricks” while others suggest he “swung his axe boldly”.

The announcement saw a flurry of new stamp duty thresholds for first-time buyers (FTBs) on a permanent basis.

Alongside this, stamp duty will be eradicated for purchases of land and buildings for commercial or new residential development.

Twenty7Tec director of customer relationships Nathan Reilly says by cutting stamp duty to energise the housing market, “the Chancellor is borrowing from the Rishi Sunak playbook”.

Reilly explains: “When we saw this in 2021, we had incredible volumes of new business in the housing sector, and some of the busiest times in living history for mortgage advisers and lenders.”

“The context is clearly different this time – with a different macroeconomic picture for both interest rates and inflation – but Kwarteng and Truss will be hoping that the house buying market can play a major role in the UK’s near-term economic growth.”

“The mortgage market is currently increasingly reliant on the remortgage market, and a stamp duty change is likely to rebalance this back towards a purchase-driven market again.”

These announcements come as part of the new government’s mini-budget, in which a host of other tax cuts were announced with the aim of boosting UK economic growth.

During Kwarteng’s speech, he said: “In the current system, there is no stamp duty to pay on the first £125,000 of a property’s value.”

“We are doubling that to £250,000. For FTBs, who currently pay no stamp duty on the first 300,000 pounds, we’re increasing that threshold to £425,000.”

“And we’re going to increase the value of the property on which FTBs can claim relief from £500,000 to £625,000.”

“[This will] mean that 200,000 or more people will be taken out of paying stamp duty altogether. This is a permanent, effective, from today.”

Assetz Group chief executive Stuart Law comments: “A [stamp duty] cut will undoubtedly support many FTBs and buyers on lower incomes, granting more people access to the housing ladder by offsetting increasing mortgage rates and rising house prices.”

“But, a [stamp duty] cut is going to stimulate demand further at a time when it is already vastly outstripping supply and that’s only going to send prices one way.”

Law suggests that a stamp duty cut “gives with one hand and takes away with the other”.

“The only way to truly support the housing market long term is to stimulate supply so it better balances demand, with affordability as the natural outcome. In that sense, the proposals announced by the government to reform the planning system are exactly what’s needed, just not in tandem with a huge demand stimulus at a time when it is already impossible for the housing sector to keep up with demand at its current level,” he adds.

Quilter tax and financial planning expert Rachael Griffin says: “Every Chancellor wants to have his moment as a magician and pull a rabbit out of a hat at a budget. While today’s ‘fiscal statement’ is of course far from a budget, the cut to stamp duty represents just one of Kwarteng’s crowd pleasing tricks.”

Meanwhile, Fine & Country managing director Nicky Stevenson describes the announcement as a “huge moment for the UK housing market”.

Stevenson says: “Stamp duty has long been regarded as the most counterproductive tax of all, preventing families from upsizing, downsizing, and in some cases blocking them from getting on the ladder altogether.”

“Despite its debilitating effect, no Chancellor until now has been prepared to curtail what has become a very lucrative cash cow for the Treasury.”

“In the short-term, slashing buyers’ moving costs will help mitigate the pain of higher interest rates. In the long-term, it will encourage homeowners to sell family homes and downsize more cost-effectively, while also motivating housebuilders to get more spades in the ground as FTBs take advantage of the increased no-duty threshold,” she adds.

Mazars director in the tax advisory team Sean Cockburn also believes the cuts will have a positive impact on the impact. He suggests the cuts will “spur on property transactions and that’s exactly what the treasury will be hoping for”.

Cockburn comments: “Firing up demand and pumping in investment, the tax cut adds an extra sense of freedom for buyers and sellers across the market. Property has been made even more accessible for FTBs, with the thresholds up on all fronts.”

However, not everyone in the industry welcomed the announcement with open arms. Hargreaves Lansdown senior personal finance analyst Sarah Coles says the cuts in the medium-term, “risk making life even harder”.

Coles explains: “This is the Treasury’s reaction to rising interest rates, which it is worried will squeeze the life out of the housing market. Higher mortgage rates and higher property prices form a toxic cocktail, that risks killing off demand. For buyers facing forking out thousands of pounds right now, it’s a welcome change.”

“However, there’s every chance that the change doesn’t drain the toxic cocktail, it just remixes it.”

“Structural changes in stamp duty aren’t guaranteed to stimulate demand. When relief was introduced for FTBs, the government assessed the impact the following year. It found that most of those who took advantage were going to buy anyway, so it only increased demand by around 1,000 transactions in the first 13 months. Given the costs involved, that worked out as a cost to the Treasury of around £160,000 per extra transaction. It was also calculated to have decreased the cost of buying by up to 0.5 percentage points, but increased prices by up to 0.7 percentage points – wiping out any cost saving for buyers.”

“Even if the change does persuade more people to buy, a shortage of buyers isn’t the biggest problem facing the property market right now , the real brake on the property market is a severe shortage of supply, because the average agent only has 36 properties on the books.”

“Stimulating demand without addressing this just risks pushing prices higher. Higher prices coupled with higher mortgage rates are going to push properties further out of reach for millions of people, which could in itself end up scuppering sales. The property market is a delicate beast, and tinkering with tax incentives always risks producing a result you weren’t fully expecting,” Coles adds.

While The Guild of Property Professionals chief executive Iain McKenzie says the cut to stamp duty will be welcomed by people currently buying a house, he says “this will not solve the wider issue of affordability in the property market”.

“The government needs to address the issue of housing supply by making home-building a priority. The review on planning systems for infrastructure announced today could go some way towards easing the supply issue, but it relies on the Chancellor’s pledge to ‘get Britain building’.”