Stamp duty holiday will push up house prices: London buyers will save £14k but sellers will demand more money as result

House prices are set to be pushed up in London by Rishi Sunak’s stamp duty cut, say leading experts.

The Chancellor is raising the threshold at which the levy starts to £500,000 which will mean a £14,200 saving on the average non-first time buyer purchase in the capital, according to one analysis.

Paul Johnson, director of the Institute for Fiscal Studies, told the Standard: “The lifting of the stamp duty threshold to £500,000 will benefit a significantly higher fraction of property transactions in London than the rest of the country.

“The savings from the increase in the threshold could be very significant but they are likely to be shared between buyers and sellers as sellers are able to charge a higher price for the property.”

However, he also warned: “This boost is due to end in March next year. The risk is that, particularly if the economy is still stuttering, the housing market will go back into the doldrums in the months following the end of this scheme.”

The upward pressure on house prices from the stamp duty change could be offset by economic woes felt by some households as unemployment rises.

The Resolution Foundation said the £3.8 billion stamp duty change amounted to a “tax cut for Londoners”.

It concluded that the gain from raising the threshold would range from £14,200 on the average home in London with a value put at £486,000, according to January 2020 figures.

The average stamp duty bill in London in Zone 1 could fall by £14,180 which equates to a 15 per cent discount, and in Zone 5 by £9,640, or 69 per cent, according to Hamptons International.