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HMRC figures trigger fear of housing market slump

A leading market commentator is warning that transactions and prices will fall without the stimulus of the stamp duty holiday.

Karen Noye, mortgage expert at Quilter, says: “With the stamp duty holiday now completely off the table there is likely to be a deflation in house prices.”

She adds: “You can see how effective the holiday has been in attracting buyers to market at an economically turbulent time.

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“While the massive changes to our working lives will have played a role in people’s decision to up sticks, the stamp duty holiday really gave people the impetus to make the move.

“Without the holiday many might have adopted a wait and see approach. However, the consequence of so many people choosing to take advantage of the holiday is that house prices have skyrocketed.”

Despite the huge surge in transactions the tax take from SDLT has fallen because of the stamp duty holiday.

HMRC data released at the weekend show that land and property stamp taxes receipts have decreased by 25 per cent from £11,600m to £8,670m between 2019 to 2020 and 2020 to 2021.

“All predictions point to an economically difficult winter with rising inflation, the prospect of Covid coming back with a vengeance and continuing supply issues” says Noye. 

“These issues may slow down the property market considerably as there will no longer be the impetus of the stamp duty holiday to attract buyers to market.”

One financial services figure - Mark Bogard, chief executive of The Family Building Society - has even called for the stamp duty holiday to go on.

In a BBC interview he says the holiday which ended last week was "very elegantly crafted".

He goes on: “People seem to forget there was no [tax] holiday for buy-to-let investors. There was no holiday for second home purchases. There was no holiday for people buying from abroad.

Instead it created a wider stimulus as people spent significant amounts of money sprucing-up a property before a sale, on the transaction itself and then after moving into the new home.

He also argues that, with stamp duty in England and Northern Ireland not paid on purchases of up to £500,000, in the first phase of the stamp duty holiday, it benefitted the less wealthy areas of the country. That, he says, helped with the government's levelling-up agenda.

"I can't see any argument for not continuing with [the stamp duty holiday]” he concludes.

  • C B
    • C B
    • 04 October 2021 06:33 AM

    Well, somebody got out of the wrong side of the bed this morning…!

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    In the article, one supposed expert says that there wasn’t a tax holiday for buy to let buyers. That isn’t correct. Buy to let buyers did receive a discount during the stamp duty holiday. Less than a standard buyer, but a discount nonetheless.

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    Hardly needed a crystal ball to figure that one out. The SDLT intervention was not needed and pushed prices up wiping out any savings except for the ones who got in early. Once again the government lack if understanding of the law of unintended consequences strikes again.

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    The decline in new instructions to the market still means that values are rising. If you look at the long term trend in property value inflation this trend still has some time to play out. Maybe the right argument but wrong timing.

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    Increases in the asking price wiped out any savings you could have made on the house purchase. The only winners are the sellers at this stage. House before stamp duty holiday £460,000, the same house during the stamp duty holiday £560,000

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    'The only winners are the sellers at this stage.'

    If they had an onward purchase, hard to see them as winners unless down-sizing, potentially. If you sold up and moved into long-term renting, you might be more of a winner.

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    Yea renting would be a real winner PMSL

     
  • Mark Walmsley

    “Fear of the unknown” is the issue now. During the height of COVID, moving house was an emotional necessity for many. Now a majority of the sellers (who did not take the plunge earlier) are possibly rueing it but also worried about financials. PLUS we are in that catch 22 where the general public are thinking “if nothing is on the market for sale, then why would I choose from only a small selection of properties”. This mentality means stagnation until would be buyers “go for it” and launch there own for sale too.

  • Andrew Stanton CEO Proptech-PR    Proptech Real Estate Influencer

    HMRC receipts would be down as about 1M of buyers enjoyed a tax break. Tax break equals less receipts for HMRC. Also HMRC data is at the end of the property journey as it is compiled from properties/land of 40K value or more that has completed. So, what is happening in the October 2021 housing market will filter into completions most likely late February 2022, given the usual 5 month sales cycle. That is the data that will be key.

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