For the first time in more than a decade public sector net borrowing in July – excluding the nationalised banks – ran up a surplus.
Yes, you heard me correctly, a £184m surplus. That’s a word that since the credit crunch we have barely heard uttered.
Given many were predicting a deficit of £1bn the news came as a surprise to all concerned and the big question of course is whether it can be maintained in the months ahead.
It has however, already raised predictions of potential wriggle room for Hammond as he seeks to prepare and present his November Budget, and I’m sure there will be plenty of lobbying for some considerable action to be taken on Stamp Duty.
Unable to move
Pressure has been growing on Hammond to act and there is much concern at both the top and the bottom of the property ladder.
It’s been suggested that many retired homeowners feel unable to downsize and this clearly impacts on the supply of properties available to those below them on the ladder.
And with the 3% additional property Stamp Duty Surcharge affecting every single person buying an additional property, it is perhaps not surprising the fall in purchases has been so marked.
So, with a Budget surplus under his belt what might Hammond do, after all he’s not touched Stamp Duty since taking office.
It is a tricky one to tackle, especially if the market gets wind of a move in the offing. After all, why would you purchase now, pay significantly more in Stamp Duty, only to find that the Budget changes everything?
Back-dated Stamp Duty changes are not likely and rumours of change may stifle the purchase sector even more in the lead-up to the Budget as people wait and see what will be announced.
Clearly, there are options: Stamp Duty holidays for first-time buyers, raising thresholds, cutting back on the additional property surcharge (or even getting rid of it), cuts in Stamp Duty for those buying homes less than those they are selling in order to help the downsizers – all are options on the table.
But he still might opt for the status quo; after all, the revenues he is currently raking in from Stamp Duty are large but how long will this continue if transactions continue to drop.
One suspects that now would be a good time to provide the housing and mortgage markets with a notable fillip.
Certainly, private landlords could do with a reeling back of the surcharge and Hammond might also feel that older homeowners (a core voting demographic) might be worthy of a cut in order to get them moving and their properties onto the market.
It presents an interesting conundrum for the chancellor but one that I would urge him to embrace, otherwise a subdued market might tip over into depressed.