Speculations over the consequences and implications of the stamp duty holiday ending have been rife over the course of the past few months, with many arguing that it has led the property industry to a cliff-edge moment.
Whilst there is some truth to this, in the sense that a small minority of buyers may not be able to complete on their purchases if they miss the tax savings, there is no suggestion that this will become a wider trend in the property market.
With a climate of uncertainty surrounding the market moving forwards, it is important to look back and assess the success of the initiative.
When reminiscing in years to come, the stamp duty holiday should be viewed as both a historic moment and achievement.
Indeed, the high level of market activity signifies the success of the scheme, with HMRC reporting property transaction levels increasing 219% from June 2020 to June 2021.
A result of the huge increase in demand is also demonstrated by recent statistics showing the average house price in the UK has rocketed by 13.2% from June to June, with Rightmove reporting it’s ‘busiest ever H1’.
Whilst the holiday has been a success, there are a number of factors which have played a vital role in the growth of the property market that must also be taken into consideration when making predictions the coming months.
Namely, pent up frustrations from the suspension of property viewing in Spring 2020, banks slashing their interest rates leading to the mortgage rate war, the help to buy scheme and the imbalance of supply and demand in UK housing.
Additionally, the new First Homes scheme, which was launched in June, may also promote and drive demand in the market beyond the conclusion of stamp duty holiday. All of the aforementioned factors should provide confidence that the market is far from crashing.
We should and do encourage confidence in the market; however, the opposite is the case for complacency in the market, as this would only threaten the hard-earned gains both in terms of affordability and market activity.
The success of the holiday has left no doubt in my mind that permanent changes should be made to stamp duty, with the tax break providing tremendous benefits that should be continued.
These benefits included: protecting jobs in the property and mortgage markets, placing the industry at the heart of the countries post-pandemic economic recovery, and offering potential savings of up to £15,000 and therefore addressing the affordability concerns of buyers.
HMRC has also benefitted from the scheme as it revealed in August it had collected £5.7bn in stamp duty receipts; £2.2bn higher that the total for the same period last year.
For these reasons, amongst other smaller ones, there are clear advantages to having a permanently reduced stamp duty tax.
The success of the stamp duty holiday for the property industry, buyers and HMRC cannot be overlooked. While the holiday has been a clear hit, it is important that we do not understate the existing and continued strength of property market, which facilitated the success of the scheme, similar to that of pouring oil on an already burning fire.
Due to a combination of the strength of the market and the success of the stamp duty holiday, I’d encourage permanent changes to stamp duty.
Currently, house prices are 8% higher than they were a year ago and removing this form of relief could shut many buyers out until a scheme of a similar nature is introduced.
Although, the scheme was hastily introduced due to the damage caused by the economic downturn, there is no reason we cannot make successes of the pandemic like that of stamp duty holiday permanent.
