A leading agency says the new normal likely to establish itself in the housing market after the end of the stamp duty holiday this week is set to include a much-enlarged second home sector for many wealthy families.
Knight Frank says the holiday home boom that established itself after the first Coronavirus lockdown in 2020 isn’t over, and more buyers than ever have opted for the attractions of a second home.
Consistent with reports of a booming second homes market in South West England during the year of the staycation, the number of transactions liable for the second home three per cent stamp duty surcharge hit a new high of 84,700 in the second quarter of this year, says the agency.
The number will also include buy to let investors taking advantage of the stamp duty holiday but it is nevertheless the single largest quarterly figure since the Higher Rates for Additional Dwellings surcharge was introduced in 2016.
The trend is certainly boosting the coffers of the government, according to the agency.
The surcharge contributed £485m of the £2.06 billion of residential stamp duty collected in Q2 2021, which was the largest slice on record - 24 per cent. It was also the largest contribution by value since Q4 2017.
“I’m not surprised, people have been much more driven to purchase” says Mark Proctor, head of the South West region at Knight Frank. “They were unable to travel overseas last year, and the lack of freedom of movement left many wanting somewhere to retreat to outside of cities.
“Being told to work from home has enabled people to realise their lifestyle ambitions via a second home, and with the equity that’s built up in the London and the South East property markets over the longer term, that five-year plan to buy a second home has come forward considerably for many buyers.”
Second home purchases outside of London increased by 83 per cent in the first eight months of 2021 compared to the five-year average, according to Knight Frank data.
A major rise was in the Central region - up 58 per cent over the same period - bolstered by a recent focus on the Chipping Norton region of the Cotswolds in the TV show Clarkson’s Farm.
“Clarkson’s Farm is referenced by almost everyone we meet in the area,” said Damian Gray, head of Knight Frank’s Central region. “It has put the village and surrounds in the spotlight.”
Meanwhile, second home purchases in the South West, which is more of a traditional target, doubled in the same period.