Could a stamp duty holiday restore buyer confidence after the Covid-19 restrictions are lifted (which, by looks of it, is imminent)? With the property market at a near-standstill following the introduction of the restrictions, and with mortgage lenders only just beginning to reintroduce first-time buyer mortgages, will the property market bounce back this year?
The answer is, maybe, but not if some significant measures are introduced to boost confidence during what is likely to be a worrying time for a huge number of prospective home owners. Although most properties that were put up for sale before 23 March are still available, it's not certain whether they will find their buyers this year. Estate agents Knight Frank estimate that as many as 500,000 property sales could be 'lost' in 2020.
In order to prevent a vacuum from forming where buyer demand should be, RICS have been calling on the government to introduce a stamp duty holiday as a way to help buyers and soothe some of the anxiety they will be feeling about their financial futures. Confidence in the medium to long term economic outlook for 2020 and beyond remains unstable, with mass unemployment remaining a threat for as many as two million UK worker. It makes sense that would-be buyers are likely to be more cautious.
We have reached out to Sydney Cronin, spokesperson for RICS, seeking clarification on just what the proposed stamp duty holiday would involve. The name suggests that it would work in a similar way to a mortgage holiday; however, as Cronin explains, the measure sought would mean that 'no stamp duty is paid for property transactions for a set period' in order to avoid 'merely creating debt to be repaid further down the line'.
This bold move would almost certainly boost buyer interest and is proposed for a period of three months after the restrictions are lifted. RICS are not seeking to establish any specific deadlines at this point, as the discussion is still at proposal stage.
RICS have been calling for the stamp duty tax to be reformed for years, and welcomed the abolition of stamp duty for first-time house purchases of up to £300,000. The recent trend for stamp duty tax, however, has been to increase it, with additional three-per-cent charges introduced by those buying second homes and overseas buyers.
Whether or not a stamp duty holiday is introduced, 2020 will be a pretty good time to start looking for a home, with interest rates on mortgages remaining very low. We've teamed with online mortgage expert Habito: use their free comparison tool below to see how much you could borrow.