– What is stamp duty?
The Stamp Duty Land Tax was introduced in its current form in December 2013 and applies to people who buy a property or land over a certain price in England and Northern Ireland.
The previous threshold meant property costing over £125,000 is liable for the tax, although the 2017 Budget abolished stamp duty for first-time home buyers in England and Wales purchasing homes up to £300,000.
– What is the case elsewhere in the UK?
Wales and Scotland have their own arrangements.
Since the announcement, in Scotland the threshold for paying land and buildings transaction tax was raised from £145,000 to £250,000 from July 15 and in Wales it rose from £180,000 to £250,000 from July 27.
– What were the stamp duty rates before the July 8 announcement?
For first-time buyers, there was no tax on places costing up to £300,000 and 5% on the portion from £300,001 to £500,000.
For those who have purchased a house before, it is a sliding scale and people pay on the portion of the property price which falls within each band.
The bands are: 2% on properties costing £125,001-£250,000, 5% on £250,001-£925,000, 10% on £925,001-£1.5 million, and 12% on any value above £1.5 million.
Buyers of second homes – whether buy-to-let or holiday homes – pay a 3% surcharge over the standard rate.
– What has changed following the announcement?
In July the Government temporarily increased the threshold to £500,000, saving people up to £15,000 in stamp duty.
Analysis by Rightmove suggested that buyers in England’s Home Counties areas clustered around London would be particularly likely to make big savings, thanks to the uplift in the stamp duty threshold to £500,000.
It also found areas where the average price tag on a home is close to £500,000 include Dorking in Surrey (£498,422), Lewes in East Sussex (£491,304), Oxford (£479,099), Chesham in Buckinghamshire (£462,210), Borehamwood in Hertfordshire (£476,791) and Bath (£464,617).
– What could the impact be on the housing market?
Richard Donnell, research and insight director at Zoopla, said it would ‘provide a further boost to demand for housing’.
Stuart Adam, of the Institute for Fiscal Studies, said history showed that temporary cuts in stamp duty could provide an ‘effective fiscal stimulus’ to the economy.
Treasury officials believe it could spark a much wider economic recovery, with many expected to use the tax savings to invest in their new home.
Aneisha Beveridge, Head of Research at Hamptons International, said: ‘The introduction of the stamp duty holiday has given a further boost to the housing market which was already showing strong signs of recovery even before its introduction.
‘The number of people looking to buy a home has risen across every region in Great Britain since the announcement, with Southern areas recording the biggest increase.’
It is hoped the temporary nature of the expected announcement will encourage people thinking about buying a house to enter the market.
Property experts said the step could encourage some ‘missing movers’ back to the market.