While most sectors have spent the past 18 months grappling with a succession of lockdowns and other pandemic-related restrictions, the housing market has remained very much open. In fact, by all accounts, it has soared.
In the first quarter of 2021, there were 50% more transactions than in the first quarter of 2020 – long before COVID-19 even made headlines.
This home-buying boom has almost certainly been driven by buyers racing to complete their purchases before the stamp duty holiday is fully phased out.
On the face of it, the stamp duty holiday has done its part to stimulate the market and give homebuyers a welcome tax break, but it’s not without its detractors.
Many argue that the increase in demand caused by the stamp duty holiday led directly to the inflation of house prices, offsetting any potential savings and undermining the scheme.
However, while inflation may have led to an increase in overall house prices, the stamp duty holiday has nevertheless helped to democratise homeownership by reducing the amount of up-front capital needed to get on the property ladder.
At the very least, it’s been an elegantly crafted experiment into how stimulating one area of the market can have knock-on benefits to the broader economy which, let’s not forget, was the original purpose of the stamp duty holiday.
While an increase in house prices is far from desirable from a buyer’s perspective, it was an inevitable consequence of temporarily removing a tax associated with home buying, and while the benefits can be argued away, the stamp duty holiday has done very little harm.
For first-time buyers in particular, the benefits of getting onto the property ladder at a smaller upfront cost far outweigh the consequences of an overall increase in the value of the property they are investing in.
Put simply, the stamp duty holiday has had a net positive impact on prospective homebuyers and has given the economy a much-needed lifeline during one of the most turbulent economic periods in a generation.
It’s perhaps little surprise that the £250,000 stamp duty nil-rate band has been extended beyond the 30th June until the end of September, but the government now needs to think about ways to
continue levelling the playing field once the tax break ends. We all want to revert to versions of our pre-pandemic notions of normality, but we must also be willing to learn from some of the positive measures brought in to lessen the economic blow of the pandemic.
From hybrid working to home-schooling, we’ve discovered new ways of orchestrating areas of society that are likely to stick around long after the pandemic is over – why should the property market be any different?
The technology to streamline the homebuying journey already exists, so let’s reinvent our idea of ‘normal’ to create a more efficient, affordable and less bureaucratic future for all.
