As expected within the property industry, the Chancellor announced a stamp duty holiday in his Summer Statement. This now means that the lower stamp duty threshold has been increased to £500,000 until 31st March 2020.
While there was initial confusion about whether this change affected buy-to-let and second home purchases, the Treasury quickly confirmed that the change did also apply to buy-to-let, however the 3% surcharge would remain in place.
Although there has naturally been uncertainty about the economy and the property market over the last few months, the stamp duty change is welcome news for all in the property industry particularly those in sales, lettings and mortgages.
This is the first change in a number of years to benefit property investors following on from taxation changes that saw landlords decide to sell up and leave the market in recent times.
A survey carried out by ‘This is Money’ earlier this year revealed that hundreds of thousands of landlords had left the market in recent years as a result of the tax changes.
The survey further revealed that a third of private landlords confirmed they were looking to sell at least one property over the next year. This has meant that there has been a huge demand, with each rental property on the market attracting the interest of many tenants.
From now until the end of March next year, an investor purchasing a property worth £500,000 will be looking at paying a stamp duty bill of £15,000 instead of £30,000, which is great news.
These changes will typically benefit those landlords in southern regions more where property prices are higher, particularly in London and the South East.
This situation opens up a real opportunity for landlords, as the stamp duty holiday could entice some investors back into the market, or encourage those who didn’t sell up to expand and invest in more properties.
The Labour Shadow housing secretary, Thangam Debbonaire, has been sceptical about the move, saying: “It is unacceptable that the Chancellor tried to sneak out this huge bung to second homeowners and landlords while many are desperate for support.”
However, The Conservatives soon hit back accusing Labour of 'political point scoring'.
The move will not only benefit investors but also sellers, who could potentially see increased property prices as the market starts to move, which in turn will also benefit tenants as supply increases steadying rental prices.
Although the changes to rental property stock won’t be instant, increasing the number of rental properties available is likely to provide tenants with more options in the long-term.
Of course there is no ‘quick fix’ to the property market. The last few months have been fraught with uncertainty, however the stamp duty holiday gives those looking to get on the ladder, make moves or invest in property a real opportunity to do so and supports them during a time where they might be affected financially.
With the current sale to completion period estimated at around 14 weeks, landlords would be best-advised to look at property sooner rather than later if they wish to utilise the scheme as it is running for a limited time which will undoubtedly add pressure to conveyancing teams up and down the country.
The positive and negative effects of the lockdown and the stamp duty holiday on the property market are unlikely to be seen for a while yet.
However, I am confident that this incentive will entice people back to the market, and will see landlords beginning to invest in property over the next few months.
*Ellie Donaghy is Head of Lettings at Andrews Property Group