All good things must come to an end. That said, there is now some level of debate regarding whether or not the Stamp Duty holiday was ever a good thing in the first place. There’s even more debate about whether or not it was wise to extend it. Be that as it may, it is now rolling to an end. This raises the question of what that might mean for property investors.
Stability will hopefully return
Over the last few years, the UK housing market has been through some interesting times. Brexit and COVID-19 both created uncertainty. The Stamp Duty holiday tempted buyers to get over their hesitation and get (back) into the market.
With hindsight, it may have been rather too generous, certainly in its original form. Since its introduction, UK house prices have been surging upwards. Admittedly, the Stamp Duty holiday may not have been the only reason for this. It’s been well documented that there has been increased demand for bigger homes (with space for home offices). It must, however, surely have had a role to play.
Hopefully, the feeding frenzy of the last year will now ease back into more normal levels of activity. This should make it easier for investors to read the market fundamentals and hence make informed decisions about their portfolio.
Price inflation may slow or even stop
This is an interesting point. Anyone familiar with housing markets will be well aware that even the most rampant growth inevitably runs out of fuel at some point. The sort of growth the UK housing market has seen over the last year simply cannot go on forever. At some point, growth has to slow or even stop completely.
Nevertheless, what goes up doesn’t necessarily have to come down. If house prices get too far ahead of average earnings, sellers may just stand pat until general inflation does its job. This could result in a lack of properties for sale but keep prices high when properties do change hands.
To make the situation even more complicated, general housing statistics can be very different from the statistics in specific micro markets. These micro markets can be locations or types of property or a combination of both. In the context of the Stamp Duty holiday, the key point to note is that it favoured onward movers rather than first-time buyers.
With the Stamp Duty holiday over, the fact that first-time buyers get a Stamp Duty break now has real meaning again. It’s therefore entirely possible that the market for family homes and forever homes will slow down while the market for starter homes picks up.
Property professionals should be under less pressure
Since the Stamp Duty holiday began just about everyone involved with property has been working flat out. Now that the Stamp Duty holiday is over, they should have time to breathe again. In fact, they may be eager to take on new work to keep their cash flow going. This means that now could be a great time to start hiring people for any work you need doing.
It also means that housing officials are likely to have more availability to deal with non-urgent queries. Keep in mind, however, that this is likely to be relative. Firstly, they are quite possibly still working from home. Secondly, they will probably be dealing with a backlog of queries due to COVID-19 (and the impact of the Stamp Duty holiday).
In short if you’ve been putting off dealing with housing officials because you thought it would be impossible to get through to them, then now might be the time to put in your enquiry. Just be realistic about the fact that it may still take a bit longer than you might like to get a response.