Pressure continued to mount on the government to clearly address the issue of stamp duty as a leading business consultancy suggested a switch of SDLT from buyer to seller could offer short term relief to a house price fall triggered if there’s a No Deal Brexit.
KPMG says UK house prices could fall by an average of more than five per cent if Britain crashes out of the EU without an agreement next month - and n some regions the drop could be as high as 7.5 per cent.
Even a drop of 10 per cent to 20 per cent is “not out of the question” if the market overreacts.
“A no-deal Brexit will see household finances more under strain, with any rises in earnings likely to be more subdued and higher inflation depressing their purchasing power even further” says KPMG’s chief UK economist Yael Selfin.
She continues: ”Add to that a rising unemployment rate and an overall decline in confidence as a result of the initial disruption, [and] you can see why people would hold off making any major financial commitments, which would trigger a larger correction in house prices.”
The KPMG report also notes that, if a deal were to be agreed by the current October 31 deadline, house prices would stabilise this year and rise 1.3 per cent in 2020.
However, the KPMG study says that a switch of stamp duty from buyer to seller - a plan he appeared to support at one time during his recent Conservative leadership bid - could provide short term relief to the market as transactions would pick up.
The absence of clarity on the government’s stamp duty plans - after what appeared to be hints about reform not only from the Prime Minister but also from the Chancellor and the Housing Secretary - is being blamed by some market analysts for a slow start to the autumn sales market.