Stamp Duty Holiday Imperative Post-Lockdown
RICS has urged the government to enforce a stamp duty holiday once the social distancing restrictions are lifted in a bid to improve consumer confidence and encourage the UK to start moving as soon as they are able.
Medium and long-term measures to re-ignite a property market which was starting to improve this year will be needed following a government imposed freeze on the current market, according to RICS.
The ‘March 2020 RICS UK Residential Market Survey’ has highlighted the huge swing in the property market’s fortunes from a three month period of increased buyer enquiries to March’s incredible declines.
Buyer enquiries shifted from a net balance of +17% to -74% in just a month. Similarly, respondents also reported agreed sales falls from +19% in February to -69% in March.
The average stock on estate agent books is at an all time low of 40 properties per branch with respondents recording a net balance of -72% when it came to new housing stock.
Understandably, these uncertain times have rocked the foundations of the sector and caused confidence to plummet.
Near-term sales expectations over the next three months hit record lows of -92% and even the 12 month outlook recorded a net balance of -42%, indicating that the sector feels we may struggle for a sustained period of time. These figures are the lowest on record since the series began in 1998.
In order to encourage movement, Hew Edgar, RICS head of government relations, believes significant government intervention is needed to prop up a market which will be severely lacking confidence post-coronavirus.
Hew Edgar, RICS Head of Government Relations, commented:
“While the UK’s health is the priority, our survey feedback suggests that the Government will need to start considering medium and long-term measures that could assist a post-pandemic housing market.
“These are exceptional circumstances and the Government will need to consider all avenues that could feasibly rebuild confidence, bridging the gap between uncertainty and recovery.
“RICS is not an organisation that would call for a stamp duty holiday on a whim, and indeed our view prior to Covid 19 was that it required a full-scale review. As we start to emerge from this crisis, however, it is likely that the finances of potential homebuyers will be under strain, and the burden of stamp duty could put buyers off. For those who can afford to move they may lack confidence in the market, adding to the slow down. A stamp duty holiday could be one of the ways to reactivate the housing market quickly as a short term measure.”
Simon Rubinsohn, RICS Chief Economist, said:
“The results of the latest RICS survey capture the period during which the economy moved into lockdown so show a somewhat mixed picture. But critically, the key forward looking indicators clearly reflect the emergency measures in place. The fact that responses are negative not just at the three but also the twelve month time horizon is significant in suggesting that the legacy of covid-19 could be such that any return to what might be described as ‘normality’ in the economy will take time and households will remain cautious for a while.
“Of course, the primary focus of government is at this stage the health of the nation and defeating coronavirus and it may be a little premature to be planning for the economic recovery. However, the feedback from the survey does imply that further government interventions both in the wider economy and more specifically in the housing market may be necessary to aid this process supporting businesses and people back into work.”