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RICS: Stamp duty holiday helping to lift demand

The stamp duty holiday introduced from the 8th July is helping to lift demand, The RICS UK Residential Market Survey suggests.

In July a net 75% of surveyors saw a rise in new buyer enquiries, the second month in a row that demand has rebounded significantly. A net 59% also saw instructions rise, up from 41% in June.

RICS noted that the stamp duty holiday is having a big impact on demand based on anecdotal evidence.

Ross Counsell, chartered surveyor and director at property buyers, Good Move, said: “Today’s RICS statistics reveal the UK housing market gained further momentum last month which showcases the ongoing recovery – something we’re all happy to hear after a turbulent few months.

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“We have seen an increase in new buyer queries, as well as a rise in new listings and sales. The measurements employed by the government such as the stamp duty holiday has positively impacted this spike.

“These latest statistics should hopefully help reassure buyers and sellers in the UK that the property market is starting to return to “normal”.

“However, we must not forget that we are now in a recession, therefore we advise buyers who are looking to purchase a home during the recession to thoroughly check out the property before they commit, and ask important questions such as how much work the property may need to ensure they’re protecting their finances and getting the best possible deal.

“Buyers must not get swept away in a low house price or jump at the first-rate a mortgage lender offers. Purchasing a home during this time is a big decision and one that needs to be thought about carefully.”

A net 26% of surveyors expect an increase in sales, however a net -10% expect sales to tail off over the course of the next 12 months – likely due to the stamp duty holiday expiring in March 2021.

Tomer Aboody, director of property lender MT Finance, said: “With the stamp duty holiday in place at least until March and hopefully longer, this should help support the housing market to a degree.

“No doubt there will be some negativity and a potential fall in confidence after government schemes such as furlough have ended but a possible downward trend should be eased by banks already preparing a loss buffer (HSBC), allowing them to work more closely with borrowers who might be struggling with repayments.”

BY RYAN BEMBRIDGE

Source: Property Wire

BTL mortgage availability Almost half One in 10 North West Stamp Duty holiday Buy-to-let 5-year fixed BTL mortgages buy to let investment areas UK property investment locations buy-to-let lenders BTL properties buy-to-let landlords Number of UK buy-to-let landlords buy-to-let limited companies
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Stamp Duty holiday and falling mortgage costs provide timely buy-to-let boost

After years of cracking down on landlords, the chancellor’s Stamp Duty holiday is a shot in the arm for the industry.

It’s not been an easy few years for the nation’s landlords.

A succession of decisions by the Government has chipped away at just how attractive it is for people to invest in property, particularly if they want to do so on a small scale and have maybe one or two buy-to-lets in a portfolio.

But a couple of recent changes may have made the prospect far more enticing.

Say goodbye to Stamp Duty (for now)

It was no great surprise when the Chancellor stood up in the House of Commons to announce a Stamp Duty holiday.

The nil rate threshold is temporarily being hiked from £125,000 to £500,000, meaning that nine out of every 10 buyers in England and Northern Ireland won’t have to pay any.

The surprise came in the revelation that this is being applied to landlords as well as those buying a property they intend to live in themselves.

Just a few years ago a higher rate of Stamp Duty was introduced for those buying a second home, in a bid to make buy-to-let less appealing (or more profitable for the Government, depending on your point of view).

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While this 3% surcharge still applies ‒ landlords can’t avoid Stamp Duty entirely ‒ it does mean they will enjoy smaller Stamp Duty bills as a result.

For example, before the changes, if I wanted to buy a £250,000 investment property I would pay 3% on the first £125,000 and then 5% on the remainder, meaning a total tax bill of £10,000.

That tax bill will now drop to £7,500, a tidy saving, especially if you’re looking to buy more than one investment property.

Falling mortgage costs

Another significant source of optimism for all would-be property investors has been the shifting state of the buy-to-let mortgage market.

Perhaps unsurprisingly, the number of buy-to-let mortgages on offer has dropped significantly as a result of the Covid-19 crisis.

According to data from financial information site Moneyfacts, the number of buy-to-let deals stood at 2,897 in March, but had crashed to just 1,455 in May.

The reopening of the housing market has led to a rise in the number of products on the market though, with product numbers jumping to 1,738 in July.

Still a long way down on the pre-pandemic, but a clear move in a more positive direction.

It’s not just the numbers of products that are likely to give landlords hope though, but the rates being charged on them too.

Moneyfacts data shows the average rate on two-year fixed rate buy-to-let deals in March stood at 2.77%, while on five-year deals it was 3.24%.

By July, this had fallen to 2.61% and 2.97% respectively.

Part of this will be down to the fact that lenders are far warier about lending at higher loan-to-values currently.

But equally, now that the market is moving again, lenders will want what business there is. And that competition will likely feed into some decent deals for landlords.

Jenny don’t be hasty

That said, there’s no doubt that moving into buy-to-let at the moment could be a nervy move.

Yes, there remains healthy demand for rental properties ‒ the shortage of housing hasn’t disappeared, and while people will struggle to purchase their own home, they will have to rely on rental properties.

But taking on any tenant is a big gamble at the moment. With significant unemployment seemingly on the way, how confident can you truly be that they will be able to maintain their rental payments?

There’s only so much due diligence you can do on a tenant ‒ you can’t really have a chat with their boss to find out what the chances of them getting the boot in the next year are.

Fortune favours the brave

Landlords are often painted as the pantomime villains of the housing market, a little unfairly in my view.

But the truth is that the Stamp Duty holiday is a real boon for investors, who could also benefit from lender competition and enjoy cheaper funding when purchasing their next buy-to-let property.

The big test will be just how robustly they run the rule over prospective tenants, to ensure they don’t end up with costly void periods. It doesn’t matter how much you saved on your Stamp Duty bill or mortgage, if you end up with an empty rental property.

By John Fitzsimons

Source: Love Money

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Stamp duty holiday: What does it mean for the UK housing market?

In a “mini-budget” spring statement tomorrow chancellor Rishi Sunak is expected to announce a range of measures to boost the economy which has been ravaged by the coronavirus crisis.

As part of the package the chancellor is reportedly planning to cut stamp duty for properties worth up to £500,000 in a bid to reinvigorate the housing market after it was brought to a standstill by the coronavirus lockdown.

Data published this morning by Halifax showed that UK house prices fell for the fourth month in a row in June – the first time since 2010.

Estate agents and property industry groups have been urging the government to grant a stamp duty holiday throughout the coronavirus crisis, in a bid to encourage nervous buyers.

The Royal Institution of Chartered Surveyors (Rics), Knight Frank and Zoopla were among those in the sector to call for a cut to stamp duty.

What is a stamp duty holiday?

Stamp duty is a tax paid by property buyers, and the amount paid depends on the area of the UK, the value of the property or land and whether or not you are a first time buyer.

In England and Northern Ireland buyers pay the tax on properties sold for more than £125,000, although first-time buyers only pay stamp duty on deals worth more than £300,000.

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For non-first-time buyers the tax is two per cent up to £250,000, five per cent up to £925,000, 10 per cent up to 1.5m and 12 per cent above £1.5m.

Sunak is expected to say he will raise the property tax threshold to as high as £500,000, four times its current level. That would exempt most homebuyers from paying any stamp duty for up to a year, the Times reported.

Who would benefit from the changes?

Experts said that buyers with big deposits that are looking to purchase a home in a more expensive area will benefit the most from the tax cut. First-time buyers could benefit depending on where they are looking to buy a house.

Legal & General Mortgage Club director Kevin Roberts said: “The latest stamp duty holiday proposals look to be another step in the right direction and make for positive reading for first-time buyers.

“Our new research suggests that first-time buyers could be the engine that drives the housing market forward this year, with 93 per cent still planning to purchase a property in 2020.

“A stamp duty holiday would bring more savings to these people planning to step onto the ladder. Our research revealed that many prospective homeowners have already been managing to save extra during the lockdown – an average of £107 a week in fact.”

However, Rightmove property expert Miles Shipside said that a stamp duty holiday would not benefit most first-time buyers without better mortgage availability.

Rightmove’s Property Expert Miles Shipside said: “Buyers in higher priced areas with bigger deposits would benefit most if the stamp duty threshold was raised to £500,000.

“If it is included in the summer update it needs to be made clear what it would mean for people home hunting or currently going through the conveyancing process right now, as an announcement now that doesn’t come into play until the autumn will only lead to people delaying their plans.”

“There have been similar packages in the past which were focused on people buying their first home, but the suggestions are that this new proposal will be for all buyers,” Yorkshire Building Society’s strategic economist Nitesh Patel added.

“This will benefit homeowners looking to upsize and downsize, as well as first-time buyers in high-value areas.”

What would a stamp duty holiday mean for the UK housing market?
Property experts anticipate that tomorrow’s announcement could boost housing activity, although they warned that changes must be implemented straight away to avoid buyers holding out until autumn.

Yorkshire Building Society’s strategic economic Nitesh Patel said: “We have yet to see the full details of a stamp duty holiday package, but if the speculation is correct then buyers purchasing a property of up £500,000 from the Budget announcement in the Autumn stand to save between £10,000 and £15,000 – which is a substantial amount and should boost housing activity.

“But, it would be even better if the changes came into force straight away rather than waiting until the Autumn.”

Patel added: “ Mortgage rates are near to record-lows, which is also likely to help the housing market over the coming months, particularly for those buying more expensive properties. I would also expect more homes to come on to the market, particularly around this price bracket, as the stamp duty cut would improve the saleability of their home.”

Bricks & Logic founder Matthew McDwyer added: “We may not see an immediate spike in asking prices to the level we saw in 2015, but it will definitely support the market and we will perhaps see slight price increases for the cheaper to middle range of the market.”

“However, any reduction in stamp duty on second homes or investment properties could spike new demand from overseas investors or landlords,” McDwyer said.

By Jessica Clark

Source: City AM

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RICS and NFB call for stamp duty holiday

The Royal Institute of Chartered Surveyors (RICS) and the National Federation of Builders (NFB) have called for a stamp duty holiday once the lockdown ends.

RICS members are expecting house prices to fall over the next 12 months – but the organisation said temporarily removing stamp duty would help quickly get the market running again.

Hew Edgar, RICS head of government relations, said: “RICS is not an organisation that would call for a stamp duty holiday on a whim.

“As we start to emerge from this crisis, however, it is likely that the finances of potential homebuyers will be under strain, and the burden of stamp duty could put buyers off.

“For those who can afford to move they may lack confidence in the market, adding to the slow down.

“A stamp duty holiday could be one of the ways to reactivate the housing market quickly as a short term measure.”

Afterwards the NFB backed the call.

Richard Beresford, chief executive of the NFB, said: “A temporary stamp duty holiday would encourage new build sales and release some much needed cashflow back to our struggling housebuilders.

“It would also ensure vital businesses, such as surveyors and conveyancers, are able to continue operating in these difficult times. We support it.”

The National Federation of Builders also backed are campaigns to defer planning contributions and council tax on vacant new builds, as well as extend planning permissions by 12 months.

Rico Wojtulewicz, head of housing and planning policy at the House Builders Association (HBA), the housebuilding division of the NFB, said: “Housebuilders, many of whom are struggling to get lending from the government CBILS scheme, are still expected to pay bills, their staff and the supply chain but with reduced or no revenues.

“A temporary stamp duty holiday is another immediately deliverable solution that the government should pursue.

“Any delay in increasing support to our industry will see businesses go to the wall and once one goes, the domino effect will be striking.”

BY RYAN BEMBRIDGE

Source: Property Wire

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Call for stamp duty holiday to kick start housing market

The Royal Institution of Chartered Surveyors (RICS) is calling for a stamp duty holiday for homebuyers to “reactivate” the housing market once the UK emerges from its Covid-19 lockdown.

In the space of a month, demand for homes, newly-agreed sales and house price forecasts have all plummeted and surveyors’ sales expectations for the next three months are at their lowest ever recorded by the RICS market report.

The March lockdown, surveyors fear, will have a significant impact on the housing market for the rest of 2020.

In February, 21% more surveyors expected house prices to rise in the short-term, rather than fall.

By March, the outlook for house prices in the coming months had turned negative, with 82% more surveyors saying they thought values would fall.

Almost 40% of surveyors expect house prices to fall further over the next 12 months.

In the next three months, the majority of surveyors expect the number of house sales to decline, while over a 12-month period, this is less negative with just over 40% more surveyors expecting sales to fall further, than those who expect them to rise.

‘Burden of stamp duty could put buyers off’

A stamp duty holiday, said the RICS head of government relations Hew Edgar, was one way of restarting the housing market quickly after the restrictions on movement have been lifted.

“RICS is not an organisation that would call for a stamp duty holiday on a whim, and indeed our view prior to Covid-19 was that it required a full-scale review,” he said.

“As we start to emerge from this crisis, however, it is likely that the finances of potential homebuyers will be under strain, and the burden of stamp duty could put buyers off. For those who can afford to move they may lack confidence in the market, adding to the slow down.

“A stamp duty holiday could be one of the ways to reactivate the housing market quickly as a short term measure.”

The institution’s chief economist Simon Rubinsohn said the negative responses from surveyors over 12 months, as well as three, suggested it would take some time for the housing market to return to normality and households are expected to remain cautious for a while

He said: “Of course, the primary focus of government is at this stage the health of the nation and defeating coronavirus and it may be a little premature to be planning for the economic recovery.

“However, the feedback from the survey does imply that further government interventions both in the wider economy and more specifically in the housing market may be necessary to aid this process supporting businesses and people back into work.”

Written by: Samantha Partington

Source: Your Money

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Calls for stamp duty holiday as UK house prices set to fall amid coronavirus crisis

The government has been urged to take action to support the housing market, including a stamp duty holiday, as UK house prices are forecast to drop due to coronavirus.

The Royal Institution of Chartered Surveyors (Rics) has called for a stamp duty holiday as a “short term measure”. It said it could encourage potential buyers to act after the immediate public house crisis has passed.

The call came as a survey found 74 per cent of respondents expected London house prices to drop within three months. UK house prices are also expected to fall.

Last month 39 per cent of chartered surveyors reported a fall in buyer demand in the capital. 60 per cent more respondents reporting a fall in agreed sales than in February.

New homes coming onto the market dropped sharply in March, with a net balance of -63 per cent of London respondents reporting a fall.

Meanwhile, six per cent of landlords have reported a rise in new instructions during March. Tenant demand rose 19 per cent.

Respondents said the virus will drive rents down in London over the three months.

Hew Edgar, Rics head of government relations said: “As we start to emerge from this crisis… it is likely that the finances of potential homebuyers will be under strain, and the burden of stamp duty could put buyers off.

“For those who can afford to move they may lack confidence in the market, adding to the slow down.”

A stamp duty holiday could “reactivate the housing market quickly as a short term measure,” he said.

Simon Rubinsohn, Rics chief economist, added: “The feedback from the survey does imply that further government interventions both in the wider economy and more specifically in the housing market may be necessary to aid this process supporting businesses and people back into work.”

By Jessica Clark

Source: City AM