Stamp Duty Holiday Extension
Rishi Sunak’s long-awaited March Budget has left most businesses in the property industry breathing a sigh of relief. It was revealed this week that UK homebuyers would receive a stamp-duty holiday for three months longer than previously expected (the deadline, which was set for March 31st 2021, has now been set for the 30th June 2021). Stamp Duty is a tax you may have to pay when buying a residential property or land in England or Northern Ireland (Judge Estate Agents, 2021).
Homebuyers and estate agents alike are relishing the opportunity to save money or increase sales after a tumultuous 12 months for the industry.
Research conducted by Opinium for Propertymark revealed that estate agents took an average loss of£4,123 for each failed sale (Mortgage Finance Gazette, 2021). Per branch, MFG have uncovered that17 sales failed on average. Research also revealed that had the holiday not been extended, a further 325,000 households would be likely to have fallen through (Mortgage Finance Gazette, 2021).
Prior to the announcement, MoneySuperMarket surveyed more than 5,000 people on the subject of stamp-duty changes. It revealed that 74% believed the holiday should be extended with only 19%arguing that the extension would not be necessary (Mortgage Finance Gazette, 2021). This was certainly proven to be the case for home buyers supported by a previous study. They too found that63% of buyers were looking to purchase as a result of the stamp duty holiday and that 60% would have put off plans to buy a home if the holiday was not extended (Mortgage Finance Gazette, 2021).
Guy Gittins (Chief Executive of Chestertons) comments:
“The government’s introduction of a 95 percent loan to value mortgage presents good news for first-time buyers, keen to get on the property ladder” (Estate Agent Today, 04.03.2021).
This year, many estate agents are seeing a slight boost in sales. The Evening Standard notes that shares in FTSE 100 housebuilders (including Barratt, Berkeley and Taylor Wimpey) are up around 3% whilst Persimmon was enjoying an almost 5% increase (Bourke, 03.03.21).
The news comes with some dissent with onlookers fearing for the return to market normality and its aftershocks. Group chief executive of Andrews Property Group, David Westgate, foresees that the holiday extension will simply delay the effect of the pandemic describing the measures as ‘simply kicking the can down the road’ (Thomson, 26th February 2021).
Others have noted that Sunak’s budget has failed to identify how the holiday will be wound down. Commentators such as Iain McKenzie argue in favour of a tapered wind-down period to stabilise the industry, reducing sudden change. He states: ‘A gradual phasing out of the scheme would ensure that consumers still waiting to complete aren’t hit in the wallet and would make more sense, as a ‘cliff-edge at any time’ is an unnecessary threat. ‘Considering property transactions are taking longer to complete, if there is no gradual phasing introduced, buyers entering the market now will need to do so prepared to pay stamp duty.’
So, what does this mean for home buyer attitudes, behaviors and sales trends?
Ian McKenzie comments:
“With the zero-rated stamp duty limit extended to £250k until the end of September and the average UK house price being £252k, it means that thousands of people can benefit from this incentive – particularly first and second-time buyers” (Estate Agent Today, 2021).
Current sales are expected to go ahead with a low rate of fall-throughs. This is great news for people who have already begun the buying process, but for those who haven’t yet started, they may miss the holiday deadline. This is because the buying process usually exceeds 3 months; longer than the 3 month extension window for the stamp duty holiday (Your Move, 2021).
What does this mean for Estate Agents looking to normalise or increase sales?
1. Appeal to first time buyers
Estate Agents should anticipate an increased number of first time buyers displaying interest in property and they should begin using marketing techniques that not only suit their needs but pique their interest.
The average age of a first time buyer in the UK is currently is between 18-35 years old. Since younger generations are generally more tech-savvy than their elders, it makes sense to adapt marketing techniques to suit their digital lives. Virtual tours are an excellent way to market to this group and ensure interest after the stamp duty holiday ends. Research supports this: the 18-35 age bracket is 130% more likely to view a property in person if they are advertised with a virtual tour (LPC360, 2019).
2. Appeal to those who cannot travel to view
With the easing of lockdown, many will be rearing at the opportunity to get back out there. For many however, it’s simply too daunting or risky. This group remains an uncatered market.
With the elderly and other at-risk groups unable to take advantage of the easing of lockdown, take them with you on a virtual tour. Be inclusive.
We can help, get in touch.
Norwood, G. Stamp Duty: new cliff edge or cause for delight? Estate Agent Today.
Published toestateagenttoday.co.uk. Published 4th March 2021. Accessed: 4th March 2021.
Bourke, J. Budget 2021: Shares in housebuilders rise as stamp duty holiday extended, in move cheered by estate agents. The Evening Standard. Published 4th March 2021. Accessed 4th March 2021.
Anon. Stamp duty holiday: Consumers and estate agents offer verdict on extension. mortgage finance Gazette. Published to mortgagefinancegazette.com. Published 25th February 2021. Accessed4th March 2021.
Anon What is Stamp Duty? Judge Estate Agents. No published date available. Accessed 4th March 2021.
Thomson, L. What does the stamp duty holiday extension mean to house buyers? The Metro. Accessed: https://metro.co.uk/2021/02/26/what-does-the-stamp-duty-holiday-extension-mean-for-house-buyers-14146826/?ito=cbshare
The stamp duty holiday extension – what does it mean? Your Move explains. (your-move.co.uk). Published 26th February 2021. Accessed 4th March 2021.
Garrett, K. 9 Virtual Tour Statistics you need to know. LCP360. Accessed: https://www.lcp360.com/blog/virtual-tours-statistics. Published 8th February 2019. Accessed 4th March 2021