As Chancellor Rishi Sunak today confirms during the Spring Budget 2021 that the Stamp Duty Holiday deadline has been extended, we bring you reflection and commentary from some of the property industries leading figures on what they have heard coming out of parliament.
- Government support for coronavirus continues
- UK to borrow peacetime record of £355bn this year
- Stamp Duty Holiday on houses extended until June
- No tax liability on sales under £500k
Kevin Shaw, Group Managing Director of Residential Sales at LRG, says: “The Stamp Duty Holiday extension is positive news for both the property sector and the wider economy. In the past year it 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, enabling buyers who didn’t get through in time to still take advantage of the reduction in Duty. While there is still the opportunity for buyers to move and take advantage of the reduction, it’s also important that anyone looking to sell starts the process now to have any hope of completing before the new deadline.”
Commenting on the extension to the stamp duty holiday and introduction of a government-backed 5% mortgage in today’s Budget, Tom Brown, Managing Director of Real Estate at Ingenious, said: “The Chancellor’s decision to extend the Stamp Duty Land Tax (SDLT) holiday and provide a Government-backed guarantee to mortgages with deposits of just five per cent reflect the importance of maintaining optimism in the UK housing market. This level of support shows that the Government continues to view the housing market as key to the UK economy at a time when the latest Nationwide House Price report confirmed that demand from buyers is being sustained. The support provided by the SDLT relief extension, saving up to £15,000 on property purchases of £600,000 is positive news for our strategy as an alternative lender focused on the affordable end of the market.”
Iain McKenzie, CEO 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% 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.
“The Government is really looking to turn Generation Rent into Generation Buy.
“While 95% mortgages are mainly a positive initiative that could help first-time buyers get onto the property ladder, this lending must be responsibly targeted.
“The extension of the furlough scheme to the end of September will also bring solace to millions of people concerned about the impact to mortgage and rent payments in the event of a sudden loss of income.”
Andy Foote, director at SevenCapital said: “This is a positive budget for the property market announced today. The extension of the stamp duty holiday as it is until June, and the lesser anticipated extension of a holiday on properties up to the value of £250,000 will go a long way in avoiding a collapse in transactions – as previously feared.
“Given the average UK house price sits at around £252,000 overall, and with properties in the Midlands and North of England, Wales, Scotland and Northern Ireland individually sitting at a lower average, this effectively means the average buyer can continue with new purchases through to September.
“Will this mean simply delaying a stall in market activity? We will see, however in the short term, considering the significantly higher level of transactions the industry is currently fighting to complete, this is good news. It is likely we may see a further boost to transactions over the next six months.
“Landlords and owners of second homes will also be breathing a sigh of relief at the news that capital gains tax will not be increased, contrary to rumours flying around prior to the Budget being revealed.
“This group of people have already weathered multiple tax-storms over recent years and in a period that has proven tough for many, a hike to taxes would have potentially pushed them over the edge and forced a further exodus from the market, which would in turn have a knock on effect on the rental market. Thankfully for now, this will be avoided.”
Lee Pickett, partner and housing law specialist at global legal business, DWF, comments on the extension to the stamp duty holiday. He said: “Whilst this will be welcome news for the housing market, it will also be met with caution as it merely kicks the can of the withdrawal effect down the road a little. We have certainly seen developers concerned about unhappy customers who, through no fault of theirs, would miss out on the SDLT holiday due their new home not being ready for legal completion in time. Equally, various supply chain and labour availability pressures resulting from the pandemic and/or Brexit, are likely to be key factors in developers being unable to deliver homes before expiry of the SDLT concession period.
“There is an alternative view that the market was functioning well enough when the SDLT holiday was introduced and it simply pushed up prices, removed the advantage first-time buyers had and reduced tax revenue at time when it is most needed. Perhaps the compromise might have been to distinguish between transactions and chains involving new build properties and those which only involve existing housing stock. That, however is not what the Chancellor has decided to do and perhaps that is to do with simplicity of application among other factors.”
Tom Bill, Head of UK Residential Research at Knight Frank, said: “The extension is fair because completion dates for buyers and sellers have been jeopardised through no fault of their own. The conveyancing system has simply been overwhelmed by the volume of transactions since the market re-opened last May. The three-month taper until October will make any cliff-edge in June feel less steep but we would still expect a surge in activity to capitalise on the full saving.
“Ultimately, there needs to be some finality, whether in terms of the end-date or by making the holiday permanent. The housing market has exceeded expectations over the last year but it needs to revert to normal seasonal patterns of activity and a balance between supply and demand that revolves around the calendar year and not the tax year. Any continued speculation around the end of the holiday would prove more damaging for the housing market than the end itself.
“We expect more sellers to return to the market this month as home-schooling ends and Covid cases continue to fall. This will put downwards pressure on prices in Q2, an effect that could be magnified if more owners now believe they can complete before an extended stamp holiday duty deadline.”
Finally on Mortgages: Oliver Knight, Head of Residential Development Research at Knight Frank, said: “Purchasers at higher LTVs have had a tough year in the mortgage market, so any help is welcome. However, banks have demonstrated a reluctance to lend in this market during the past twelve months, partly due to the sheer volume of business at lower LTVs and partly due to concerns over the outlook for jobs. Though that outlook is improving, the success of the scheme will depend on how many lenders take it up, on top of those announced so far, and what pricing they adopt. The government will be hoping the guarantee will significantly stimulate appetite to lend in that space.”