There are fears that despite the current levels of activity, the rumoured closure of the housing market could negate the positive impact of the ‘stamp duty holiday’ and push house prices up even more. Estate agents and lenders believe a shutdown will end up causing even more harm to our already beleaguered economy.
The call to put house sales on hold has come from both scientists and politicians.
Labour leader Keir Starmer and London’s Mayor, Sadiq Khan have both called upon the Prime Minister to review whether estate agents should be classed as essential or non-essential businesses. And when pressed, the Health Secretary Matt Hancock refused to rule out a temporary pause on buying and selling houses.
The Chancellor, however, is not convinced. Rishi Sunak was quick to underline he feels strongly that the residential property sector must remain open.
Will a closure lead to the stamp duty holiday being extended?
Mr Sunak’s position does not come as a surprise. He has been a very public supporter of the housing market since the beginning of the pandemic.
Last July he introduced a tax break for all homes worth less than £500,000 in his emergency summer budget. This meant buyers would save £15,000 above the threshold and pay no stamp duty below it. However, this break only kicks in upon completion. If sales are unable to complete by the stamp duty holiday deadline of March 31st 2021, any savings would be lost.
This means that to protect the housing industry, the Chancellor may have to consider extending that deadline in the event of the market is forced to shut down.
The decision will need to be counterbalanced against the distinct possibility that even a short pause could push house prices up even more than they have been during the last 6 months.
During the first lockdown, the fact we were unable to move house led to an increase in house prices across the UK. A second shutdown could well repeat that pattern and leave buyers – and particularly first-time buyers – with an even steeper hill to climb to purchase the home they want.
And many prominent property spokespeople have warned it is not just buyers, sellers, agents and lenders who would be affected by a shut down. The other industries who rely on house moves – for example removal companies, certain tradespeople and landlords – will also be hit.
Moreover, a potential shutdown also begs the question that if people are being forced to move for their own safety, wellbeing or because their current situation doesn’t allow them to work from home, would exceptions be made? This could add an additional level of complexity and confusion that may be impossible to manage.
We will continue to monitor the situation and provide updates as and when they become available.
If you are planning to move to a new house and would like to discuss the best approach while things are a little uncertain, please email me at [email protected] or call me on 0208 515 6600.