Stamp duty: Phil Spencer says he sees ‘catastrophe brewing’
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The Stamp Duty holiday was brought in July 2020 by Chancellor Rishi Sunak in response to the coronavirus pandemic. The holiday has seen the rate of Stamp Duty slashed to 0 percent for properties below £500,000 until March 31, 2021. The Stamp Duty holiday has been warmly received by many property owners and businesses over the last year. The Chancellor is now facing calls to extend the Stamp Duty holiday to prevent a cliff-edge where property sales will fall through or people will miss out on the savings.
What has been the impact of the Stamp Duty holiday?
Property experts believe many people have benefitted from the Stamp Duty holiday over the last few months.
The latest data suggests the Stamp Duty holiday has also had a significant impact on house prices, according to the Office for National Statistics (ONS).
The latest report shows the average UK house price reached a record high of £252,000 in December 2020.
Property values surged by 8.5 percent year on year, marking the highest annual growth rate since October 2014.
Mike Scott, Chief Analyst at estate agency Yopa, said in response to the latest ONS House Price Index that the figures show a “very active market”, in part due to the Stamp Duty holiday.
Mr Scott said: “The Official government House Price Index for December shows a very active market, with average house prices rising by 1.2 percent in the month and by 8.5 percent since December 2019.
“It is important to note that this is largely historic data, and doesn’t necessarily reflect the state of the market now that it is too late for a new buyer to beat the March 31 deadline for avoiding Stamp Duty.
“The home purchases that completed in December will mostly have been agreed, and had their prices established, in late summer and early autumn.
“We will have to wait for the June report, due in August, to see what prices buyers and sellers are agreeing right now.
“Nevertheless, the report does show that the combination of the re-opening of the housing market in May after the first lockdown and the Stamp Duty holiday that was announced in July led to a mini-boom in house prices.
“Only London has lagged significantly behind, with prices rising by only 3.5 percent over the year as pandemic-driven buyers prioritised space over an easy commute.”
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Is there likely to be a Stamp Duty extension?
Pressure to extend the Stamp Duty holiday is significant, with nearly 150,000 people signing an online petition to extend the holiday by six months.
Reports from the Telegraph have indicated Mr Sunak is considering a short six-week extension to the Stamp Duty holiday.
However, any extension to the holiday has not yet been confirmed by the Government.
If there is an extension to the Stamp Duty holiday, Mr Sunak is expected to announce this in his Budget statement on March 3.
Mr Scott also added there could be a “short extension” to the Stamp Duty holiday in the future.
He said: “The Stamp Duty holiday will soon end, although there might be a short extension announced in next month’s Budget, but the other drivers of the market will still be in place.
“Many people will be reassessing their needs and priorities as the pandemic finally recedes, and moving house will be easier when we are out of lockdown, so we expect that after a short pause around the end of the Stamp Duty holiday the market will return to a high level of activity with further price rises, especially for the larger and less urban homes that are now in high demand.”
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