Stamp duty holiday boosts the property market
People on the lookout for a new house have been busy snapping up their dream homes as they rush to beat the stamp duty holiday deadline.
The holiday has meant that anyone purchasing a house up to £500,000 would pay no tax as long as they complete their purchase by 31st March 2021. This came into play last July, the Chancellor Rishi Sunak intended to boost the property market and certainly seems to have worked with agents reporting a great flurry of sales. Research by Keller Williams UK examined savings so far and found that, of 147,969 sales, 85% were below the £500,000 price bracket making them exempt, whilst pre-holiday the bill would have totalled £1.444bn. In the south and home counties, home buyers saved the most at £190m alone.
Covid-19 vaccinations boost confidence
Confidence in the economy underpins the booming housing market and many property experts say that a successful vaccine programme is a key to confidence and mortgage availability: Chris Heath, MD of Cube Homes explains: "Key to the housing market will be the banks’ appetite to provide mortgages and the general level of confidence in the economy and the future. If a Covid-19 vaccine is shown to be effective and can be delivered at scale, this may likely help to drive the feel-good factor up, despite rising unemployment, as those still in employment feel a sense of confidence with the prospect of returning to normal.” Chris warns that ending the holiday abruptly could have dire effects: "Hopefully the Chancellor will set out a tapering of the STLD relief programme Hard cliff edge changes are always unhelpful.”
The People want a fairer system
House buyers across the UK may have saved themselves some money, but some experts believe that a fairer system should be introduced instead. Dan Wilson Craw, of campaigning group Generation Rent, describes the stamp duty holiday as a big giveaway to homeowners when half a million renters are getting behind on their rent’. He thinks that the savings have simply been added to house prices: "With most first-time buyers already exempt they are getting no benefit.” He calls for a fairer system: "The government must think harder about a fairer way of taxing property. Stamp duty should be rolled into council tax, to make an annual payment that is proportionate to the value of what people own. That would mean removing a major barrier to people moving home while making sure everyone pays a fair share.”
Prices start to slow down
But as the likelihood of completing your purchase before the March Stamp duty deadline starts to look unlikely, house prices have already begun to slow. January saw the annual rate of house price growth slow modestly to 6.4%, from 7.3% in December. House prices fell by 0.3% month-on-month, the first monthly drop since June according to figures from Nationwide. Robert Gardner, Nationwide’s chief economist explains: "To a large extent, the slowdown probably reflects a tapering of demand ahead of the end of the stamp duty holiday, which prompted many people considering a house move to bring forward their purchase. While the stamp duty holiday is not due to expire until the end of March, the activity would be expected to weaken well before that, given that the purchase process typically takes several months.”
Covid-19 continues to cause lifestyle interruptions
And, whatever happens, to stamp duty, many take the view that the pandemic will continue to cause people to reevaluate their lives prompting more moves in search of a house that better meets their needs. Carlo Novato, founder of Haxted explains: "Looking at the long term, we believe the home has been re-defined. We have seen starkly during lockdowns why a home is a sanctuary. We now know again with much greater clarity what it should be, how flexible and adaptable it needs to be, and why quality is everything. The quality and quantity of space have never been so important.”
Could there be an extension?
Rishi Sunak revealed the holiday will be extended in his March budget and plenty of agents and developers belief, and hope, that he will: Becky Munday, of estate agency Munday’s, based in South London is optimistic: "Looking ahead, we expect to see continued stability in the London market. We’re expecting the current Stamp Duty Land Tax, SDLT, holiday to be extended, which will help to ease the risk of any drastic price drops or sales falling through that don’t meet the deadline. Young buyers are now snapping up one and two-bed flats again and we expect this trend to continue, particularly if the holiday is extended.”
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