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Summary
- Property professionals are requesting Chancellor of the UK Rishi Sunak to extend the deadline of the stamp duty
- In order to boost the property market, Sunak had announced a Stamp Duty Land Tax holiday this year
- In July, the Government had unveiled £3.8 billion worth of stamp duty relief which resulted into a mini boom in the property market
A group of property professionals have joined hands to move a petition requesting the Chancellor of the UK Rishi Sunak to extend the deadline of the stamp duty. Earlier this week, they had asked the Boris Johnson government to make an announcement regarding the same before Christmas.
The petition was signed by 14 trade bodies which included Conveyancing Association, Kate Faulkner, Landmark, MAB, NAEA Propertymark, Purplebricks, Simplify, Society of Licenced Conveyancers, the Guild of Property Professionals, the House Buying and Selling Group and the Residential Property Surveyors Association.
The letter states that if the prospective buyers had to pay stamp duty in full, they could not afford to proceed. This would affect the buyers, having an adverse impact on the housing market and the construction industry. It also highlighted the disruption that could affect the normal operations of the housing market. It read that the extension of six months would help the market to return to its regular conditions.
Mark Hayward, who belongs to the estate agency group NAEA Propertymark, said that the stamp duty which ends on 31 March could result in hampering thousands of sales which would have a dramatic effect on the housing market. He added that the trade bodies have been urging the government to think about the timings again, which would help in releasing the pressure from the system.
With the sellers rushing to beat the stamp duty deadline and introduction of new lockdown restrictions pushing strong demand, there was a 0.5 per cent fall in the house prices in November. In July, the government had unveiled £3.8 billion worth of stamp duty relief, which resulted in a mini boom in the property market. Now an extended furlough scheme will also come to an end on 31 March.
Working of Stamp Duty Holiday
In order to boost the property market, Sunak had announced a Stamp Duty Land Tax holiday this year, which meant that buyers who were buying residential properties in England and Northern Ireland would not be paying stamp duty under the temporary threshold of £500,000.
The allowance of £300,000 had already been helping the first-time buyers, and this announcement motivated the buyers in purchasing more expensive properties to make the biggest savings. On a property costing £400,000, these buyers can save £10,000, or £15,000 on a property of £500,000.
What’s Happening to House Prices?
With buyers flooding the housing market, house prices have been touching new heights. Rightmove PLC (LON: RMV), has reported that the prices have been skyrocketing. It has also pointed out that negotiations are also very high as the buyers are not paying the prices sellers are asking for.
Though the market is surrounded by a great deal of optimism at the moment, experts have been raising concerns that once the stamp duty holiday comes to an end, house prices could fall, particularly with the existence of Covid-19 and Brexit. This could create problems for the buyers who are rushing to buy the properties before the stamp duty deadline and are paying extra in order to secure the properties, which could fall next year.
Despite the dip, there was a 6.3 per cent surge in the asking prices in comparison with the previous year. The data of Rightmove disclosed the average asking price for November across Britain was £322,025. The demand bounced back in the first six days of England’s lockdown, witnessing a 49 per cent increase in comparison with 2019.
How Are the Housing Stocks Reacting?
CLS Holding Plc (LON:CLI)
The shares of CLS last traded at GBX 216.00 on 20 November 2020 at market close. It had total market capitalisation of £879.97 million. On a YTD (Year to Date) basis, the company recorded a negative return on the price of 30.10 per cent.
St. Modwen Properties Plc (LON:SMP)
The shares of SMP last traded at GBX 376.00 on 20 November 2020 at the market close. It had total market capitalisation of £856.00 million. On a YTD (Year to Date) basis, the company recorded a negative return on the price of 25.10 per cent.
Watkin Jones Plc (LON:WJG)
The shares of WJG last traded at GBX 177.60 on 20 November 2020 at the market close. It had total market capitalisation of £448.80 million. On a YTD (Year to Date) basis, the company recorded a negative return on the price of 27.21 per cent.
Mountview Estates PLC (LON:MTVW)
The shares of MTVW last traded at GBX 10,800.00 on 20 November 2020 at the market close. It had total market capitalisation of £415.24 million. On a YTD (Year to Date) basis, the company recorded a negative return on the price of 8.47 per cent.
