A Budget Review

After receiving mixed reviews, Abode2 finds out about how the recent UK budget announcements will affect the property market. We ask Camilla Dell, Black Brick Managing Partner, for her reaction to the news about the stamp duty announcement and what it will mean for the UK property market.

“The extension of the SDLT holiday until 30th June is welcome news and will inject renewed positivity into the property market. The extension means anyone completing a purchase on a main residence costing up to £500,000 before 30th June will not pay any stamp duty. More expensive properties would only be taxed on their value above that amount. Landlords and second-home buyers are also eligible for the tax cut, but will still have to pay the additional 3% of stamp duty they were charged under the previous rules.”

She continued saying that “Buyers no longer face a “cliff edge” to try and get their transactions through before 31st March. However, for prime Central London, where property values are much higher than the rest of the UK, the saving equates to £15,000 so not a significant game changer. What’s more relevant for PCL is the surcharge coming in on April 1st for overseas buyers. The SDLT saving, whilst being seen as positive by buyers and sellers alike, has mainly benefitted sellers.”

“We are hearing reports of sealed bids and properties selling for well in excess of the asking price on lower value properties around the UK. For many buyers, the SDLT saving has been eradicated by the rise in house prices as evidenced by the recent Halifax house price index which showed that House prices in January 2021 were 5.4% higher than the same month a year earlier. A better approach would have been to make the SDLT holiday only available to first time buyers rather than all buyers. The Chancellor seems to be giving with one hand and taking with the other when it comes to overseas buyers, allowing them to have the benefit of the SDLT holiday, but then introducing a surcharge from 1st April.”

The announcement about Stamp duty is not the only part of the budget announcement that is supporting the UK property market. The underlying liquidity position of UK households plus easing mortgage conditions could help to propel the market further in the Autumn. Higher LTV mortgage products are returning to the high street and consumer confidence is turning a corner as the reopening approaches.

Meanwhile, households have built up a ‘nest-egg’ of savings during the crisis. The Bank of England’s Chief Economist, Andy Haldane, expects this savings pile to rise from £125bn to perhaps over ‘£250bn, or 20% of annual household spending, by the end of June.’ While there are hopes this cash will find its way into additional household spending, the uneven distribution of the cash – skewed towards wealthier households – suggests it may find its home in new investments or property down-payments.