Maintaining the momentum of the Stamp Duty holiday

When the Chancellor of the Exchequer Rishi Sunak announced back in July that he was temporarily freezing Stamp Duty on the first £500,000 of property purchases, the move was seen as a real shot in the arm for a housing market that had virtually ground to a halt as a result of the pandemic.

Since then, the market has flourished. According to Nationwide’s latest House Price Index, annual price growth picked up to reach 5% in September – the highest rate of growth since September 2016 – and the average house price hit a record high of £226,129.

The buy to let sector has also benefited, with landlord insurance provider Simply Business reporting that the number of landlords looking to purchase a new buy to let property has increased more than three-fold since the introduction of the holiday.

This is echoed in the latest research from BVA BDRC, which found that 7% of all landlords intend to purchase a new buy to let property as a result of the holiday – a figure rising to 18% of those landlords who have 20 or more rental properties. Landlords who’re looking to expand their portfolios say they intend to purchase an additional 1.7 properties on average.

If there’s something to temper the optimism that’s built up in recent months, it’s that the holiday has given the market such a boost that it’s in danger of becoming a victim of its own success.

With so many people looking to take advantage of the scheme, reports claim that up to 200,000 people may miss out as the surge in demand has created a bottleneck.

So what can be done to ensure we can maintain the momentum that’s built up and avoid the market falling flat after the boom of recent months?

Well, I’d encourage anyone who’s thinking of buying a new home, whether it’s a residential or buy to let property, to get their applications in as early as possible. In normal times, it usually takes around three months for an application to be completed, but we’re not living in normal times, which is why many lenders are struggling to cope with demand. Fortunately, here at Kent Reliance for Intermediaries, our common sense approach to lending means we’re well placed to process customers’ applications as quickly and with as little fuss as possible.

I’d also like to see the Stamp Duty holiday extended beyond the current 31st March 2021 deadline. With the holiday due to end just as the Help to Buy scheme starts to taper off, extending it for, say, another six months would ensure as many people as possible could benefit from the tax cut and that any remaining pent-up demand could pass through the system, leaving the housing market in good shape for whatever 2021 throws at it.