Stamp Duty: new cliff edge or cause for delight?
Agents almost without exception have backed the two-phased extension to the stamp duty holiday and also the mortgage guarantee scheme under which buyers of properties up to £600,000 can purchase with as small as a five per cent deposit.
The only hesitation – reflected in some comments below – is the uncertainty as to whether the extended SDLT holiday merely moves the hated ‘cliff edge’ further into the distance, rather than ending the worry for good.
In case you missed them, details of the Budget are below, but first a selection of enthusiastic reactions from agents and suppliers.
Kevin Shaw, group managing director of residential sales at Leaders Romans Group: “In the past year [the holiday] has been a crucial boost for the UK economy, and the ongoing momentum will certainly help to increase public confidence in the post-Covid recovery. At the moment, the property market is set to be stronger than initial forecasts have suggested and we expect Q2 to perform well. The Stamp Duty Holiday extension will certainly help with this.”
Patrick McCutcheon, head of residential at Yorkshire’s Dacre, Son & Hartley: “First time buyers are the engine room that ensures the overall liquidity of the housing market and we very much welcome this move to provide mortgages to homebuyers who put forward a five per cent deposit. The 31st of March stamp duty deadline had the potential to deliver a cliff edge to transactions. The conveyancing profession have been working incredibly hard to ensure that home movers can achieve the saving, but the extension of the relief now takes some of that pressure off the system itself, but also the emotional pressure home buyers are currently experiencing within what is already a challenging environment.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman: “The biggest test is does the Budget help maintain or even improve the number of transactions and investment without adding to upwards pressure on prices? And at the same time encourage the building of more new homes, particularly affordable ones? I have to say the Chancellor probably gets ‘B’ or ‘B-minus’ on his report card as the stamp duty extension, including the tapering, is welcome but there will be another mini cliff-edge in the autumn when this latest holiday finally comes to an end.
“In particular, the reduction in the Affordable Homes Programme, which is cutting the number of social rented homes, is of particular disappointment. The other regret is the lack of support for tenants, apart from those supported by the now extended furlough scheme.”
Bryan Mansell, co-founder of PropTech supplier Gazeal: “Although it’s positive to see the government listen to the views of agents and conveyancers on the coalface, as well as the property-buying public, more consideration should have been paid to calls for a more specific tapered end to the tax cut. A three-month extension – and additional help until September – will be more effective than an additional six weeks, which was previously rumoured to be in the Chancellor’s plans. However, it still creates a cliff-edge so even though more buyers will benefit from stamp duty savings than previously thought, there will still be some who miss out.”
Guy Gittins, chief executive of Chestertons, says: “Whether a three-month extension is enough remains to be seen. As we are witnessing the stamp duty holiday’s positive impact on the housing market, we believe there’s a strong case for the stamp duty tax system to be comprehensively reviewed; a thought that is likely to remain a hot topic over the next few months. Any additional assistance for first-time buyers is always welcome. First-time buyers were hit particularly hard by the lack of mortgage availability during the pandemic. As such, the government’s introduction of a 95 per cent loan to value mortgage presents good news for first-time buyers, keen to get on the property ladder. Another audience likely to benefit are existing home owners wanting to trade up or re-mortgage to release equity.”
Rightmove property expert Tim Bannister: “We’ve heard from so many first-time buyers over the past year of their challenges to raise a 15 or 20 per cent deposit, with a number saying they had to put their plans on hold, so the availability of five per cent deposits will really help this all-important market sector. It could help some buyers bring their plans forward, especially if they managed to save more than they were expecting to while in the various lockdowns. It’s also a helping hand to people who have been struggling to trade up because of the much bigger deposit needed. Right now there are not enough properties coming to market to satisfy the increased buyer demand that this scheme will likely bring.”
Iain McKenzie, chief executive of The Guild of Property Professionals, says: “The Chancellor gave the property market a double shot in the arm today, with a boost from the stamp duty holiday extension and 95 per cent mortgages. Extending the stamp duty holiday until the end of June, then phasing it out until September should help avoid a sudden downturn in prices caused by the much-feared cliff-edge end. With the zero-rated stamp duty limit extended to £250k until the end of September and the average UK house price being £252k, it means that thousands of people can benefit from this incentive – particularly first and second-time buyers.”
Craig Vile, director of The ValPal Network (a product of Angels Media, publisher of Estate Agent Today): “The stamp duty holiday extension is positive news … There are, however, some concerns. Firstly, if there is no tapered end, thousands of buyers could miss out on tax savings and there could be a drop-off in market activity. Secondly, there are concerns that the stamp duty holiday has artificially inflated property prices. Agents must therefore consider the impact another six months of stamp duty savings could have on average prices for the rest of the year.”
For those who missed Chancellor Rishi Sunak’s Budget yesterday, here are the main measures affecting the property industry.
The stamp duty holiday on properties up to £500,000 will be extended from March 31 to June 30; from July 1, the holiday will apply only on properties up to £250,000 until the end of September. It will not be until October 1 that the pre-Covid stamp duty thresholds and levels will resume.
This means that the maximum saving for buyers from the start of July until the end of September will be just £2,500 – sizeably less than the £15,000 saving possible under the current holiday, which continues until the end of June.
Chancellor Sunak has also confirmed that there will be government-guaranteed 95 per cent mortgage loans available from next month, on the purchase of properties up to the value of £600,000.
Sunak also says there will be a 100 per cent Business Rates Holiday until the end of June; thereafter business rates will be discounted by two thirds up to a maximum of £2m for larger businesses. However, Corporation Tax is to rise sharply from 2023.