Stamp duty holiday is not driving UK property market activity

It’s not all doom and gloom for the property market once the stamp duty holiday ends in April, according to new research by Moving Home Advice.

Its report said the majority of UK home buyers in 2021 are not being motivated by the stamp duty holiday, “despite the narrative currently being told throughout papers and news channels.”

A recent report in The Telegraph cited data company TwentyCi as saying the end of the stamp duty holiday “will leave hundreds of thousands of buyers poorer and bring the housing market boom to a crashing halt,” adding that campaigners are calling on chancellor Rishi Sunak to extend the tax break.

And Property Reporter has said that “there is an overwhelming demand for an extension to the stamp duty holiday for those who have begun the buying process but have yet to complete.”

It said an online petition started at the end of October last year now has over 54,000 signatures calling for the deadline to be moved to September 2021.

However, Moving Home Advice says that market demand will not tumble once the stamp duty holiday ends.

When it surveyed 1,071 homebuyers earlier this month, asking them what their motivation was for buying a property, only 29% said it was the stamp duty holiday.

It said its findings suggest that the housing market will remain strong throughout the next 12 months at least, because almost 40% of buyers confirm that they would be looking to buy regardless of the current political, or socio-economic climate.

This is likely because the pandemic and ensuing lockdowns are making people feel “agitated by being stuck indoors, cramped into small homes, lacking any private outdoor space,” the report explained.

“Furthermore, the new lifestyles being thrust upon us during the pandemic are contributing to a shift in personal values and life aspirations. Fresh starts and new homes are a natural result of this change. Although, of course, a stamp duty saving is a welcome cherry on top,” the report added.

With house prices at an all-time high, commentators may question why anyone would want to buy a home, especially if they’re not being motivated by the tax relief.

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Moving Home Advice research shows that less than 30% of buyers consider it “very important” for their home to increase in value after purchase. In fact, 21% say it’s not important at all.

This suggests that many commentators are incorrect in their market projections because they’re putting too much weight on the financial and economic motivations for home buying and not enough on the emotional factors, the report states.

In-house property expert for MovingHomeAdvice.com, Russell Quirk, said that “Whilst agents may be screaming at Sunak on the TV, pleading for him to extend the tax relief, they should take comfort in the fact that it appears the market will stay strong regardless.

He said the suggestion that all of the 250,000 transactions currently in the UK property pipeline will fall through in April “is bonkers and wrong.”

Even if the stamp duty holiday does end as currently scheduled, many of those transactions will have already completed, and 30% of those which haven’t will be first-time buyers who are exempt from stamp duty anyway, he explained.

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