Stamp duty holiday: Industry reacts to property tax cut
The UK property sector has reacted to the stamp duty holiday announced this afternoon, with many believing it will help to reinvigorate the market following months at a standstill during lockdown.
Chancellor Rishi Sunak said this afternoon that the stamp duty threshold will increase from £125,000 to £500,000 until March next year to boost activity after the coronavirus lockdown.
He said it will result in an average saving of £4,500 for per person, and will benefit nine out of 10 buyers.
Stamp duty holiday will ‘reinvigorate’ market
Today’s announcement was welcomed by many in the property industry, with experts claiming the stamp duty holiday will give potential buyers extra confidence.
Greg Fitzgerald, the chief executive of housebuilder Vistry Group, said the timing of the announcement “could not be better”.
“The sector, like many across the economy, has faced significant challenges in the last few months and we believe this initiative will give customers the extra confidence needed to take the exciting step of owning a home or moving up the property ladder,” he said.
“We have seen that interest from potential buyers has been encouragingly strong and robust week-on-week since the lockdown started to ease, and we believe this move on stamp duty will go a long way towards reinvigorating the market.”
Jamie Ward, head of stamp taxes at PwC, said the stamp duty holiday could boost the housing market as well as having “a positive indirect impact on a long list of related industries, such as house builders, conveyancers, estate agents, finance and insurance providers, house movers and furniture and garden retailers”.
“This stamp duty holiday could have beneficial effects on many areas of the economy,” Ward said.
‘Sugar rush for the housing market’
However, some experts warned that the benefits for the housing market and wider economy could be short lived.
“The fact that the move is temporary will be like a sugar rush for the housing market, with people who were planning to move hurrying to do so before the stamp duty holiday ends at the end of March next year,” Laura Suter, personal finance analyst at AJ Bell, said.
“It means that we’re likely to see transactions fall off a cliff once the tax break is whipped away in 2021.”
She added: “The Government will hope that the tax giveaway will see some households choose to spend that money somewhere else, on furnishing their home or spending elsewhere – in order to help revive the massive drop-off in consumer spending during lockdown.
“However, it’s more likely that people will just choose to buy a more expensive property, meaning the additional spending will be focused just on the housing market rather than boosting a range of businesses.”
David Westgate, chief executive of Andrews Property Group, said: “It is possible that we will have a boom scenario between now and April next year when a disproportionate number of people are buying at higher prices followed by softer prices when the scheme ends and asking prices are adjusted.”
Professor Syed Kamall, academic and research director at the Institute of Economic Affairs, went further, saying the stamp duty cut should be made permanent.
“The cut to Stamp Duty is welcome but why isn’t it permanent? It is a destructive, regressive tax that clogs up the housing market and limits labour mobility,” Kamall said.
More support needed for renters
There was also concern that the measures announced this afternoon do not go far enough to help renters.
Mick Silver, chief executive and founder of digital property platform Moovshack, said: “The government must also look at longer-term solutions instead of short-term sticking plasters to rejuvenate the UK housing market.
“Coronavirus-related disruptions will cause rental demand to increase since banks are likely to tighten lending restrictions, dissuading many from buying or selling in such an uncertain environment.
“Stamp duty should be reduced for buy-to-let investors to increase the availability of rental homes.”
Alicia Kennedy, director of lobbying group Generation Rent, added: “The stamp duty holiday doesn’t help renters whose incomes and savings have been destroyed by the pandemic and face a further setback to their hopes of buying a home.
“Right now the government is leaving renters to bear the cost of the pandemic – we need Rishi Sunak to increase local housing allowance, remove the restrictions stopping people from accessing it, and end the rent debt crisis before it causes mass homelessness.”