Whilst the market has already been significantly busy post-lockdown, cutting stamp duty on purchases up to £500,000 really will be the catalyst get the industry flying. The most likely impact of this measure will be a flood of buyers coming into the market who previously had sat on their hands due to political and economic uncertainty, and this flurry of activity will bring with it price rises as demand outweighs supply. However, it will also be a stimulant for those considering selling as people look to make the most of a buoyant market during the tax holiday. Whilst the virus certainly will have had a long-lasting effect on the property market, it has also meant that many people’s situations have changed and with diminishing pressure to work five days a week from the office, new working hours and other varying priorities, this stamp duty reduction will provide the additional push for many to take the plunge and get on with house moves.
As most lenders are now asking for a 15 per cent deposit, the money which would have been spent on stamp duty can now be put against the deposit, freeing up some cash and allowing many, particularly first time buyers, to get closer to owning a home. And it is not only the lower end of the market which will feel the knock-on effects of reducing stamp duty, even for those buying at over £1 million, there will be significant savings, allowing upsizers to consider properties which perhaps previously were out of reach. In addition, this could have a trickledown effect on the larger economy as buyers have the money to spend in order to ‘renovate, move and improve’ as the Chancellor said himself.
Reports have shown price falls across the property market, however these are somewhat misleading. In reality, values haven’t actually reduced in most cases, rather buyers renegotiated on purchases during lockdown or sales fell through, and this will be quickly addressed now that lockdown is easing and the market is seeing almost normal levels of activity. In fact, in some geographic areas, June has been one of the busiest months on record as prices have managed to hold firm as bottle-necks of supply have led to competition between buyers.