“The government could cut stamp duties and tax revenues wouldn’t necessarily fall as it will encourage more relocations and in turn more housing,” said Mr Clougherty.
Dominic Agace, chief executive of Winkworth brokers, added: “Downsizers will be encouraged to make their moves so that the housing ladder is unblocked. With more movers, it also means that the government’s overall tax payment will increase.”
There are no details so far on the form of the stamp duty cut, but analysts expect a permanent increase in the zero-rate band. Some have speculated that the ranges could be adjusted to reflect house price growth. Others expect a much bigger change to reflect then-Chancellor Rishi Sunak’s stamp holiday during the pandemic.
Matthew Lesh, of the Economics Institute, a think tank, said Ms Truss could raise the zero rate to £500,000 or even £1 million.
He said, “If they’re going to do something, I’d expect something substantial with the zero-rate threshold instead of messing around with exemptions.”
The move would encourage large numbers of older homeowners to relocate and free up family homes for younger buyers, Mr Lesh added. “The stamp duty is contributing to a massive misallocation of housing. It discourages downsizing because of the cost of moving, meaning other people can’t enlarge. A budget cut would free up the housing market and encourage more people to sell and move.”
But analysts warned that cutting buyers’ moving costs could lead to unsustainable home price inflation in the near term.
Andrew Wishart, of Capital Economics, an analyst, said: “By offsetting the rising cost of mortgages, a stamp duty holiday could extend the house price boom by a few months, but that would push prices to levels where a correction would inevitably to be .”