UK Stamp Duty holiday will boost London housing market, but issues remain, says Dexters
Dexters, a London-based independent Chartered Surveyor and Estate Agent, has welcomed the UK Chancellor’s attempt to boost the London and wider UK housing market through the announcement of a temporary holiday on Stamp Duty on the first GBP500,000 of all property sales in England and Northern Ireland.
Following the Chancellor’s speech, HM Treasury has now confirmed that the level at which the tax is charged has been temporarily raised with immediate effect until next March to boost the property market.
Dexters says that the announcement will boost the market in the capital however Stamp Duty remains a flawed policy and the limited short term changes announced are not helping sell higher value homes in the heart of Prime Central London. In addition, the firm believes the ongoing shortage of housing supply remains the biggest underlying issue that needs to be resolved.
Dexters say that any change to Stamp Duty is to be welcomed and will boost demand as it makes a significant difference to moving costs. Across London the Chancellor’s temporary holiday on Stamp Duty on the first GBP500,000 of all property sales will help to boost the housing market. Dexters believes that the changes are extremely good news for the city’s housing market as it will encourage people to move at all price levels and will make the whole market busier.
Dexters highlight that prior to the changes a buyer purchasing a GBP600,000 property would pay a total of GBP20,000 in Stamp Duty. With the new threshold, the purchaser will now pay just GBP5,000, an extremely significant saving.
Dexters has 12 offices in Prime Central London, and its portfolio of instructions includes grand houses, townhouses and mews cottages, as well as apartments and penthouses in the capital’s best addresses.
At present Dexters says that Stamp Duty acts as a disincentive to both buyers and sellers in Prime Central London. For properties at the top end of the market Stamp Duty is still set at a ‘crazily high’ level of 12 per cent (main residence) or 15 per cent (second home) resulting in six figure Stamp Duty bills on a typical family home, and therefore for many downsizers the large bills for alternative properties put them off moving. This results in less people moving home and restricts the housing market and therefore Stamp Duty should be replaced as recommended by the GLA in their review of the London housing market.
Dexters highlights that the London property market has shown positive signs of recovery since the lock-down, mainly due to pent-up demand. Just last week Dexters have had over 600 new instructions as a wave of clients have put their apartments or houses for sale or let.
Sales agreed by Dexters in June 2020 are up 79 per cent compared to the same month in 2019 and across the 12 Prime Central London offices of Dexters there has been a 100 per cent increase in buyers registering compared to this time last year. This has been fuelled by increasing activity through DextersInternational Relocation team and many more enquries coming through Dexters website, over 90,000 last week, up 61 per cent year-on-year.
Jeff Doble, Founder & Chairman of Dexters, says: “The Chancellor’s Stamp Duty announcement, is to be welcomed as it will help so many people buy a home in London and provides a timely boost to the market. The announcement will help increase demand for homes at all price levels across London. Thanks to the changes nearly nine out of ten people buying a main home this year, will pay no stamp duty at all. However it is not the fundamental reform that is really needed. The whole idea of Stamp Duty has suffered from “mission creep”, having evolved from a relatively harmless token amount to a huge percentage that is stifling and unhealthy for the market.”
Dexters believes that fuelling demand is only part of the equation and the underlying problem in the London market remains a dysfunctional planning system which continues to stifle the supply of much needed new homes in the capital. Dexters says that in London, planning rules should be reviewed again urgently, especially since efforts to build more homes will have a delayed response with new developments often not materialising for three years or more.