Rishi Sunak’s budget boost for the property market
This afternoon, Chancellor Rishi Sunak has unveiled his latest spending plans in the 2021 Spring budget.
As many commentators and industry experts had predicted in the weeks leading up to the announcement, Mr Sunak’s latest budget is full of measures to shield people and business from the ongoing effects of the pandemic, whilst keeping momentum going in the parts of the economy that have remained buoyant over the last 12 months.
One such measure that will come as great news to property buyers, is the continuation of the Stamp Duty Land Tax holiday until at least the end of June 2021.
According to The Times, this welcomed three-month extension will benefit property buyers who are behind 193,198 transactions currently in process, as well as helping to generate an additional 200,000 property sales over the next 3 months.
Industry experts believe you only have to look back on the success of when the Stamp Duty Holiday was introduced at the end of Q2 2020, to know that the continuation of the holiday will continue to fuel growth in the market and incentivise those buying property – for personal use and investment purposes.
The initial holiday saw an increase in property transactions skyrocket from 132,090 in Q3 to 316,300 in Q4, and despite offering savings of up to £15,000, the SDLT revenues still rose by 27% in Q3 compared to Q2, from £1.1bn to £1.35bn. According to Halifax, house prices on average rose by £57,000 across England and Wales in Q3 and Q4 last year, with house prices in the North West continually out-performing other regions, with the upward growth of 6% on the previous year, pre-Covid-19.
Some commentators believe that the extension to the Stamp Duty holiday is just the start, and in fact, the tax, which has been around since 1964, may soon be abolished to some degree for good. Paul Johnson, Head of the Institute for Fiscal Studies, noted that the extension of the holiday increases the likelihood of it becoming permanent, with Sunak confirming today in his announcement an examination into the case for long term reform of the Stamp Duty system. To make this change of tax permanent would cost the government around £3bn, however, with the increase in Corporate Tax from 19% to 25% in 2023, this would cover any incurred costs as an increase per percentage point would generate an additional £3bn, equating to £18bn for the government.
It is believed that the Chancellor’s decision to extend the Stamp Duty holiday until the end of June is to coincide with the dates set out by Boris Johnson last week, in his four-stage roadmap out of lockdown restrictions across England.
Since the start of the mass vaccination role out across the country, the UK has been heralded as leading the global fight against the pandemic due to the pace at which the country has been able to vaccinate the population – with 20 million people having been vaccinated to date, and all adults on track to have been vaccinated by the end of July 2021, according to official reports.
At Beech Holdings we have seen first-hand how the Stamp Duty holiday has helped investors to save on their investment purchases, with one investor saving a huge £25,000 this month on a property in our flagship Ancoats Gardens development.
As the property market continues on an upward trajectory going into the second quarter of the year, we are anticipating seeing the continued demand from UK and international investors looking to take advantage of the tax break before the end of June.
Did you miss out on the first Stamp Duty holiday? Looking to take advantage now? Get in touch with one of our expert property consultants, find out how much you could save, and start your investment journey with Beech Holdings today.