The experts agree that a stamp duty holiday is just what the property market needs – but what are our chances of actually getting one? Jane Howdle investigated.
As the housing market thaws following its coronavirus-induced freeze, property industry bodies have been calling on the government to provide buyers with a boost in the form of a stamp duty holiday.
From Rightmove to the Royal Institution of Chartered Surveyors (RICS), Knight Frank to the HomeOwners Alliance, the message is clear: if the government wants to kick-start the economy, buyers need to be incentivised to make their move.
While agents were given the go ahead to return to work last Wednesday (May 13) concerns about a possible price crash have left some wannabe buyers dithering over whether they should move now, or wait until there’s more certainty in the market.
“At the moment it’s still relatively quiet,” said Mark Shearing of Putterills, who reopened their offices across Hertfordshire last Thursday. “I don’t think there’s going to be a massive initial surge but there’s definitely activity.”
The current stamp duty threshold for residential property is £125,000, gradually increasing to 12 per cent on the portion of any property purchase above £1.5m. There are also discounts in place for first-time buyers up to £500,000 and a 3 per cent surcharge for second home buyers.
The obvious down side for the government is that stamp duty is a nice little earner, bringing in £8.4 billion from residential sales in the 2018-19 tax year.
Knight Frank predicted last month that the treasury could be £4.4 billion down in the next tax year if the pandemic continues to stall house sales.
Liam Bailey, Knight Frank’s global head of research said: “Despite the fact the government will forgo a significant amount of stamp duty revenue in 2020, it seems clear there will need to be a stamp duty holiday to actually get the market moving once the lockdown is lifted.
“But this move alone will not be enough – there will need to be moves across a wider number of areas including an extension to Help to Buy to support first-time buyers and support activity across all price bands.”
With 80 per cent of respondents to RICS’ latest market survey saying they had seen buyers and sellers pulling out of transactions during April, it’s not surprising that 62 per cent also said they believe a stamp duty holiday would help sales recover.
Noting that housing activity indicators had “collapsed” in April, RICS chief economist Simon Rubinsohn said “further specific interventions from Government... are likely to be necessary” to ensure the housing market can begin to operate in a more functional way and that developers have the confidence to continue building.
Hew Edgar, head of UK government relations at RICS, added that they had “called on the UK Government to explore confidence-boosting measures for the residential market as it reopens”.
He said: “The data suggests that our proposal for a stamp duty holiday would be a successful change that would boost transactional activity, helping people move home.
“There are, of course, other options available to Government as they reopen the market, notwithstanding stamp duty options such as reducing or removing stamp duty for downsizers that would kick-start market fluidity, and we look forward to continuing conversations as the market starts to move again.”
Mark Shearing of Putterills doesn’t fancy buyers’ chances however, saying he would be “very surprised” to see a change in stamp duty in the near future.
“While the government has said that it will put money into getting the economy moving again, which is very welcome, I think they’re going to see what happens prior to making that decision.
“I think if the levels of business aren‘t what they expect then they may review it, but I’d be very surprised if they did that before the Autumn Statement – and the next actual Budget isn’t until next March.”
Mark added: “I certainly wouldn’t put a transaction on hold hoping that it’s going to happen because I’d be surprised – pleasantly surprised, but surprised – if anything happened in the very short term. And I think if they do do something it will probably be at the lower end of the market to help first-time buyers.”
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