The early signs are that the stamp duty holiday is working. Is there a case for it to be made permanent?
Millions of people have taken advantage of the government’s Eat Out to Help Out scheme since it launched a week ago. Judging by property market activity since the government announced a stamp duty holiday last month, WLB member Knight Frank observes that many have also decided that now is a good time to move home.
The stamp duty holiday, which runs until March 2021, applies below £500,000 and can save buyers up to £15,000. On a multi-million pound property, the saving will be a small percentage of the transaction price but it represents a meaningful discount for the vast majority of UK buyers.
The number of offers accepted in UK markets between 8 July and 3 August was 146% above the five-year average for properties valued at less than £1.5 million, the section of the market where the impact of the holiday would be felt most. Above that figure, the increase was 71%.
Similarly, the number of new prospective buyers registering in the same period was 100% higher for sub-£1.5 million properties compared to a 70% increase above that value.
The number of viewings has also grown by more for sub £1.5 million properties, rising 46% versus the five-year average. Above £1.5 million, the increase was 13%.
Tom Bill, Knight Frank’s Head of UK Residential Research comments:
“For reasons discussed last week, the residential property market is, for now, as robust as it has been for many years.
“However, an analysis of the market since the stamp duty holiday was announced on 8 July demonstrates it has provided an additional boost, as the below chart shows.”
“The holiday, it must be concluded, is working. Whether it should become a permanent arrangement is something the government should consider.
“More companies are announcing job cuts and any additional financial friction around the mobility of labour or people unfortunately made redundant could prove counter-productive.
“We have explored before how this is not a good time for taxes that are economically self-defeating.
“If more people are moving home, that is good for the economy well beyond the confines of the housing market. If they enjoy a meal in their new local restaurant once they have settled in, with or without the benefit of the Eat Out to Help Out scheme, they are demonstrating exactly why.”