UK housing stocks rise on potential cut in stamp duty

Property estate agent sales and letting signs are seen outside an apartment building in Lichfield, Britain, May 3, 2022. REUTERS/Andrew Boyers

Sept 21 (Reuters) – Shares in British homebuilders rose sharply on Wednesday morning after a media report said the government would cut stamp duty – a tax on property purchases – in a mini-budget on Friday.

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 (.FTNMX402020), which has lost more than 43% so far this year, rose 4.1%.

FTSE 100 stocks Barratt (BDEV.L), Persimmon (PSN.L), Taylor Wimpey (TW.L) and Berkeley (BKGH.L) 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 from the report in the Times newspaper, 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 has been largely cushioned by higher house prices.

The Times said the plan to cut stamp duty would be part of new Prime Minister Liz Truss’s drive to boost economic growth. https://bit.ly/3xFQCbn

The report did not specify the size of the cut and Reuters could not immediately verify the news.

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.

($1 = 0.8825 pounds)

Reporting by Aby Jose Koilparambil and Yadarisa Shabong in Bengaluru; Editing by Savio D’Souza and Mark Potter

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