Property market must move on after stamp duty holiday extension
The Chancellor’s Budget inevitably focused on extending much-needed support in response to the Covid-19 pandemic. However, as we move through 2021, the Treasury’s focus is likely to turn to closing the spending gap caused by the health crisis.
The announcement of a three-month extension to the stamp duty holiday – and a higher tax threshold until September – will generate plenty of headlines as, according to Rightmove, it will facilitate an additional 300,000 transactions and £1.75 billion of savings.
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.
A stamp duty-related boost, combined with the vaccine rollout as we move into spring and towards summer, means the market should be in good health over the coming months with agents able to complete existing transactions and build their future pipelines.
Once the stamp duty holiday comes to an end, it will be time for the market to move on. As we come out the other side of the pandemic, it would be pleasing to see the government return to its pledge of improving the home buying and selling process through increased efficiency and transparency.
As accentuated by the stamp duty holiday rush, the current home moving process is broken and struggles to cope with a high number of transactions.
Improving security for consumers, reducing the chance of fall-throughs and making the moving process more efficient would not only help buyers, sellers and agents, but more transactions going through would provide the Treasury with an increase in much-needed stamp duty revenue.
Meanwhile, news that the government is launching a guarantee scheme to bring back 95% mortgages provides prospective buyers with a further boost.
Understandably, low-deposit lending has been affected badly by the pandemic. With the government taking on some of the risk, more lenders should feel confident in providing finance to purchasers of property worth up to £600,000.
A new scheme designed to help people onto the housing ladder could see demand for homes increase. However, whether the required number of homes to meet rising demand will be available is doubtful as there remains a serious housing shortage in the UK.
With this in mind, it’s disappointing that we are yet to hear more about how £20 billion pledged to support new housing last year, which includes a £7.1 billion National Home Building Fund, is being used to address this shortage.