We’re all going on a Sunak holiday

I was talking to a friend of mine over the weekend who gave an interesting (if unfortunate in her case) apocryphal story about the immediate affect of the Chancellor’s Stamp Duty holiday.

To recap, in the Summer Statement last week, Chancellor Rishi Sunak offered welcome relief to a chronically constipated housing market by raising the threshold to £500,000 for Stamp Duty Land Tax (in England and Northern Ireland).

This means a zero burden on sales of residences with a sale price of less than £500,001, a saving of £15,000 until the end of March next year.

For properties over that threshold, the next portion up to £925,000 will be taxed at 5 per cent and the £575,000 after that at 10 per cent. Over £1.5m will be taxed at 12 per cent. The average bill, said the Chancellor, would fall by £4500.

Mr Sunak said the move to help buyers struggling because of the effects of Covid-19. He also acknowledged the poor state of the housing market, further hit by lockdown – a fact echoed by the monthly Halifax house price index which showed prices fell in each of the last four months.

This all came in with immediate effect.

And, just as immediately, says my friend, things began to happen.

I shall call her Kate but in reality she is 30 and a high-end rental property manager in the Home Counties for a national estate agency.

Because of the high rents where she lives and even though she makes a better than average salary, as she cannot afford a deposit. A sadly familiar story.

Kate reported that within 24 hours of Mr Sunak’s announcement three of her portfolio of properties were put on sale by their owners – including the one in which she lives. In the next 24 hours, another three. With another day, prospective buyers were being shown around her home.

Sad for her of course (though I can report she has found another place close by to rent) but she also said, tellingly, that all of the properties were owned by and being viewed by families.

The Family Building Society, as has been reported on these very pages in the past, has lobbied hard for reform of the Stamp Duty regime because their Stamp Duty research (conducted with the London School of Economics) revealed it was having a detrimental effect on the flow of available properties for families.

The young couldn’t access the property ladder because the older generation found it too hard to sell their properties and ‘downsize’, thus releasing equity for their young folk to purchase that first home. 

With luck they will now, my friend Kate among them, be able to move.

Of course, the Family Building Society, with its innovative suite of Family Mortgages, is on hand to help but in the meantime – thanks Mr Sunak for the holiday.
 

Written by Steve McDowell

The content of this blog is Steve McDowell’s personal opinion and comment, and views expressed here are his and unless specifically stated, are not those of Family Building Society. The content on this page is not intended to be advice in any circumstances.

Sources:
Stamp duty: What is it, how much is it and how is it changing?
House Price Index June 2020