A stamp duty holiday is being called for by the RICS and the National Federation of Builders (NFC) who propose the Government gives homebuyers a financial leg-up once the lockdown ends. The RICS expects house prices to fall over the next 12 months and the two industry bodies think temporarily removing stamp duty will help give a much-needed boost to the housing market.
Property lawyers Collyer Bristow and Royds Withy King have thrown their hat into the ring too, echoing the call for a stamp duty relaxation, not just for first-time buyers but also for those moving up the housing ladder.
Housing needs a kick-start
At Ringley, we’re not so sure. Historically relaxing stamp duty has caused a rush to get transactions done. Clearly the housing market needs a kick start. But with the Government advising against finalising transactions that are not already in play, and with talk of a post-Covid recession/depression, we believe a robust plan for a way out of lockdown, plus moves to boost consumer confidence, would have more impact. That said, any buyer will always welcome a stamp duty holiday!
What’s our view?
Ringley Group MD Maryanne Bowring has an alternative solution. The Government should consider long-term structural change so it’s the seller who pays the stamp duty, not the buyer. “This would massively help first time buyers who have enough of a challenge raising a deposit,” she says.
Maryanne believes the market will recover when there is greater certainty of the Government’s route out of the current crisis and consumer confidence starts to improve. Of course, moving stamp duty to sellers may prompt them to ask for a slight premium on property prices to recover some or all of their costs. But then the purchaser can mortgage this price increase whereas now stamp duty has to be paid in cash. “Ultimately, stamp duty increases the overall cost by adding to the purchase price anyway,” she adds.
The weeks ahead will show whether or not the Government, which has stepped in decisively to help businesses retain staff and protect cashflow, is willing to intervene in a sector that, historically, has been left at the mercy of market forces. The housing market is a major driver of the UK economy. So now is the time to give it the helping hand it will undoubtedly need in the months ahead.