Stamp Duty Holiday…

9 July 2020

The Chancellor has just announced a temporary Stamp Duty holiday on the first £500,000 of all property sales in England and Wales which will last until March 2021 (although, to be clear, the 3% surcharge on the acquisition of additional homes will continue to be levied against the entire purchase price).

Undoubtedly, this should stimulate activity in what already has proven to be a volatile market.  Here in East Anglia we are seeing high levels of demand from buyers seeking to escape to the country or coast and many properties have been attracting offers from more than one buyer within days of marketing.  At the same time, it is noticeable that those buyers from out of area who are hoping to sell in our larger towns and cities are not enjoying the same level of demand; it would appear that we are seeing a ‘two-tier’ market.

Perhaps it is worth pointing out at this point that this is the fourteenth alteration to the rates of Stamp Duty to have been implemented since 1999 and more often than not it is a double-edged sword; there is a risk that we may see a period of stagnation if demand tails off following the expiry of this benefit in March.

Whilst we applaud any stimulus to the property market, (as you would expect), perhaps the best thing would be for the government to announce a scheme benefitting First Time Buyers, such as opening up the current Help To Buy scheme – currently restricted to purchasers of new-build properties – to the whole market.

This would mean that the 90 per cent of buyers who currently do not choose new-builds would have financial assistance, and the wider market would benefit from the injection of funding that currently goes solely to housebuilders.

In addition, perhaps the government could also consider underwriting or guaranteeing mortgages so that a lender is at no greater risk for a 95 per cent LTV mortgage than for an 85 per cent one?  This would help because the key to market success is not gained through a stamp duty cut or holiday, but by enabling more first time buyers.