Were it not for climate change, I would be very close to predicting that the summer is close to being over, and (ordinarily) we would be entering the incredibly important period which races us down towards the end of the year.
When I ask most housing market stakeholders how the year has been for them so far, I tend to get variations on the word ‘mixed’ and the general impression seems to be that, for those reliant on purchase transactions, there is not a great deal to write home about.
The latest statistics from HM Revenue & Customs seem to bear this out – residential property transactions decreased by 3% between May and June falling to 96,370 and one has to expect that the blazing sunshine we saw across most of the country during July was not particularly conducive to high levels of purchasing and activity.
Completions too showed a fairly sizeable fall in June this year, compared to the same month last year – down 5.7% in fact and the trend for activity appears to have been going in one way, down, for some time. The reasons for this are (I’m afraid) numerous and it’s not simply a case of being able to fix one issue which then leads to a significant increase in transaction levels.
The complexity of the UK housing market means there has always needed to be joined-up thinking when it comes to making major decisions, specifically with stamp duty which can provide a boost or deliver the opposite impact.
I’m thinking that very few in government ever thought that sending a message to landlords, and those who might own (or want to buy) £1 million-plus homes, in terms of increased stamp duty would stifle the market more than they wished to.
But the numbers seem to demonstrate this. Agents in London and the South East in particular will be acutely aware of how the increase in stamp duty for homes over £1 million has hit the number of purchases, and the same can be said for ‘additional property owners’, who have to pay 3% extra in stamp duty which, for landlords – along with the tax relief cuts – has been pretty brutal for buy-to-let purchase activity.
The last thing anyone needs now is a further hike in charges and we must hope that speculation to the contrary is just that. Stamp duty take has fallen in recent quarters but the reduction in revenue will not be addressed by an increase.
Indeed, history seems to show that when stamp duty has been cut, this has actually meant more purchase transactions taking place which ultimately brings in more money to the government.
As usual, I tend to look for an industry-wide response, and I note that the Conveyancing Association itself has been calling for action in this area for some time, particularly when it comes to incentivising an increase in transactions.
There are clearly some areas which are beyond our remit – there is little we can do about the lack of housing supply or house prices or mortgage affordability or the amount of deposit/equity required in order to purchase/move in the first place, but we can press for no added costs.
Many warned of a situation in which transactions would suffer because the number of first-timers able to purchase would not fill the gap left by landlords/additional property owners, and this may well be starting to happen – to the overall disadvantage of the market.
We would urge those who have the power to do so, to think carefully about their next steps and work to a healthier market on all levels. It is wrong to balkanise the housing market and assume that changes in one part can be isolated from all others.
*Paul Smee is Non-Executive Chair of the Conveyancing Association (CA)