The chancellor of the exchequer, Rishi Sunak, has announced that from today, the government has raised the stamp duty threshold to £500,000 in a bid to drive growth and support jobs across the housebuilding and property sectors.
The chancellor’s Summer Economic Update today (8th July) included a package of measures to support jobs in every part of the country, give businesses the confidence to retain and hire, and provide people with the tools they need to get better jobs.
Looking at the property sector, Rishi Sunak stated that the government wanted people to feel confident to move, to buy, to sell, to renovate, and to improve their homes.
As a result, from today until 31st March 2021, buyers will pay no stamp duty on the first £500,000 when they move home.
In England and Northern Ireland, nearly nine out of 10 people getting on or moving up the property ladder will pay no stamp duty at all.
Property industry responds
Alan Cleary, managing director of OneSavings Bank, said that we won’t really know the pandemic’s effects on house prices for many months to come, but what we do know is that the housing market hasn’t experienced these levels of uncertainty for generations.
“Put simply, the government had to step in to keep things ticking along.
“And now the chancellor is effectively taking a slice of stamp duty off the plate of would-be buyers and instead giving them a helping of pure bank account bolstering confidence.
“The whole industry will welcome today’s announcement which is practically guaranteed to stimulate activity within the residential market.
“However, it is worth noting that uncertainty remains in the commercial property market and more will need to be done to keep things moving.”
Paresh Raja, CEO at Market Financial Solutions, said that, while a stamp duty holiday is needed, he fears the government has been restrained in today’s speech.
“Put simply, a six-month holiday period also seems unrealistic.
“Buying a property needs to be carefully planned, and with many high street banks taking longer to issue mortgages, there is a risk that many homebuyers could ultimately miss out on the tax relief due to a sale taking longer than expected.
“That’s why I believe any stamp duty holiday should last for a minimum of 12 months.”
Nick Sanderson, Audley Group CEO, commented that the stamp duty was a short-term fix for a housing market that needs a long term cure.
“We have been promised radical housing and planning reforms and these mustn’t be swept under the carpet in favour of attention grabbing short term initiatives.
“If the government is truly committed to solving the housing crisis and stimulating movement both up and down the property ladder it needs to address some fundamental flaws.
“There is a chronic shortage of specialist housing for older people in the UK.
“It’s all well and good giving people a financial incentive to move, but if the properties aren’t available, the numbers won’t ever add up.”
Mark Hayward, chief executive at NAEA Propertymark welcomes the chancellor’s announcement this afternoon that he will be raising the threshold at which buyers will pay stamp duty to £500,000.
“These measures will enable people looking to buy a home to have the confidence and stability to be able to move forward with their purchase, which in turn will have a knock on effect on the wider economy as people buy white goods and furniture.
“The market is moving well at the moment, however once furlough has ceased and the anticipated recession hits, the market might well need further financial impetus, therefore it is right that the sector is given the support and tools it needs to rebound over the next nine months.”
Group CEO of Enness Global Mortgages, Islay Robinson, claimed that the government had “mostly ignored” the top end of the market in recent years and this has had a detrimental impact on demand and property values in the prime London market, in particular.
“Today has been much of the same and, although high-end homebuyers will enjoy some form of discount where stamp duty is concerned, it’s looking unlikely that this will apply to second homes and they certainly won’t be getting any richer thanks to Rishi.
“In fact, this archaic tax continues to leave a bad taste in the mouth of prime buyers who are paying huge sums in addition to the value of their chosen property, and it’s about time this government money grab is abolished altogether.”
Phil Bailey, sales director for mortgage tech provider Twenty7Tec said: “For us to have a housing-led recovery, we need first-time buyers in the market and this measure will go some way to helping alleviate the level of funding that they need to get onto the property ladder.
“However, it’s not a perfect solution.
“There’s a lack of mortgage products in the market in the 90%+ LTV range as lenders have adjusted for their risks and their own lending capacity.
“This means that deposit levels have, effectively, gone from 5% to 15%.
“There’s also less housing stock on the market, which means it’s a seller’s market.
“Unfortunately, this stamp duty holiday won’t really help with any of these points.
“In our view, it’ll drive a surge in demand, but it’s more than likely going to support people to buy bigger than helping those who are struggling to get onto the property ladder.”
Eugene Marchese, co-founder and director at later living developer and operator Guild Living, added: “While we welcome the proposed six-month stamp duty break, there needs to be a longer-term incentive for those looking to downsize.
“A permanent stamp duty cut for ‘last-time buyers’, putting them on the same footing as first-time buyers, would help the thousands of people in later life who need and want to move into an age-appropriate home to make that decision in the right way, without an arbitrary time limit imposed upon them.”
Lucy Pendleton, property expert at independent estate agents James Pendleton, stated that the London market was the overall winner from this intervention on stamp duty.
“It’s the only place in the country where buyers of all kinds will benefit en masse from more significant savings, simply because property is more expensive.
“Although buy-side incentives like this are always criticised for increasing home hunters’ budgets and, by extension, prices, they nevertheless always seem to successfully stoke demand too, and this obviously is the chancellor’s goal.”
Director for Benham and Reeves, Marc von Grundherr, commented that there was no denying that this should bring about a “monumental boost” for homebuyers going forward.
“However, some may also argue that it’s not before time; stamp duty is simply an additional financial barrier when buying and one that does little more than filling the government’s pockets.
“While the market has weathered the storm of pandemic price decline so far, this latest move should help keep property values buoyant.
“Although, it is disappointing to see yet another government initiative that focusses on fuelling demand instead of addressing housing supply.”
Source: Bridging & Commercial, July 8 2020