Chancellor Rishi Sunak has announced that, until 31st March of next year, stamp duty will not be payable on the first £500,000 of any house purchase. It means the average buyer will save £6,894.20 which should give a substantial boost to the housing market.
It is likely to benefit the more expensive purchases rather than first time buyers, who don’t normally have to pay the tax. In many parts of London, for example, average savings could be as much as £15,000. Buy-to-let and second homes will also benefit from the changes, but the 3% surcharge remains.
At the same time, Boris Johnson is also proposing a shake-up of the planning system. There are no concrete details as yet but the aim is to streamline the process and remove the need for planning permission for things like converting commercial properties into residential ones, even if that entails demolishing and rebuilding. In addition, homeowners may soon be able to get fast track permission to add an extra storey, as long as their neighbours don’t object. The full details will be released towards the end of the month but, so far, the proposals have been broadly welcomed by the housing sector.
Even before the government’s announcements, the housing market data was looking considerably healthier than many expected. Although Halifax reported house prices fell by 0.1% in June (sold prices), asking prices for properties coming onto the market were up by 1.9% compared to pre-lockdown levels (Rightmove). There was also a 40% rise in enquiries over the same period and record traffic on Rightmove’s website, with 10 of their busiest ever days between May and June.
Miles Shipside, Rightmove director and housing market analyst comments:
”Following the initial shock of the early reopening of the housing market, England is getting moving again with a boom in traffic on Rightmove.”
Many were worried prices would tumble when the market re-opened, but the data clearly suggests otherwise, with sellers achieving, on average, 97.7% of their asking prices. In the best performing region, the West Midlands, it’s as high as 98.1%. And, according to Shipside,
“Buyers may now be trying to exchange quickly, as there are signs of high pent-up demand and upwards price pressure, rather than downwards.”
Supply levels are also finally recovering with Rightmove sending record numbers of valuation requests to agents.
If you then add the stamp duty holiday into the equation, we are likely to see some positive movement in both house prices and sales volumes over the coming months.