Slump in demand for second homes could force Government reassessment of stamp duty
Company Black Brick has conveyed concern about the adverse effects Stamp Duty is having on the economy, according to their housing transactions this year.
Throughout the first half of 2018, Black Brick’s housing transactions were exclusively for primary homes.
In comparison, half of the 2017 figures were for main residential property. The statistics have therefore led to the company issuing a warning to the Government that stamp duty relief and Brexit concerns are dissuading people from purchasing second properties as investment opportunities.
When people owning second homes has increased by 30% since the year 2000 and 5.2 million adults own a second home, Black Brick worry that not enough is being done to sustain this section of the housing market.
These concerns have already been levied at the Chancellor with many perpetuating the claim that not enough is being done to encourage the buy-to-let sector to grow.
Camilla Dell, managing partner at Black Brick, said: “This complete shift in people buying second homes is a direct result of Stamp Duty and the additional 3% in tax people now have to spend on a second home or a buy-to-let.
“The consistent rise in the number of our clients purchasing primary indicates that clients are no longer buying for investment, or for discretionary second home reasons. They are buying to live here and choosing London as their home so they are close to work and London’s excellent schooling options.
“This is the first time there has been real evidence that supports the notion that higher tax rates do not lead to increased tax take.
“Whilst Stamp Duty remains a political hot potato, we can only hope that Hammond takes note of these figures and looks to reduce the rates at some point in the future.
“Looking to the second half of 2018, we expect the number of UK buyers to continue to rise. Those who don’t need to move are choosing to wait until after Brexit, and this is particularly true for international buyers.”
In a stagnant market that relies on first-time buyers, it seems as though the Government are determined to implement strategies to stimulate this section of the market in the first instance.
However, the figures offered by Black Brick may indicate a transient market that the Government will need to consider in the future.
Are conveyancers noticing a shift in buyer trends in the current market? Will a shrinking second property market impact on conveyancing business? Should more be done to encourage growth for second-steppers or additional home buyers?