A stamp duty holiday and government help will be required to get Britain’s housing market back on track after the coronavirus pandemic, the Royal Institution of Chartered Surveyors has said.
With estate agents closed, completions at a standstill, viewings at rock bottom and mortgage deals axed, people working in the housing sector remain deeply fearful for their prospects over the next few months.
And Rics members have said that the property market will need a shot in the arm once, lockdown is lifted, with a temporary ‘stamp duty holiday’ for buyers as one option.
Time to intervene? Some housing insiders are calling for a stamp duty holiday
Jitters: Quarterly property price expectations are poor, experts at the Rics have said
Plummeting: This chart shows that the housing market has ground to a halt, with sales tumbling
Commenting on possible Government interventions, Hew Edgar, head of Government relations at the Rics, said: ‘These are exceptional circumstances and the Government will need to consider all avenues that could feasibly rebuild confidence, bridging the gap between uncertainty and recovery.
‘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.
‘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.’
At present, buyers have to pay stamp duty if they buy a home for more than £125,000. Different rules apply for first-time buyers or those buying with a first-time buyer if the property is less than £500,000. A few years ago, the Government also introduced additional stamp duty surcharges for people buying a second residential home.
According to figures published by Zoopla earlier this year, around 2.7million properties have fallen within the higher 5 per cent stamp duty bracket since 2015. The system has long been criticised for being overly complex and costly for buyers.
The three-month outlook for house sales has fallen to the lowest level since records began at the Rics in 1998, its latest survey shows.
After getting off to a decent start in the first few months of this year, the pandemic and subsequent global lockdowns have sent estate agent sentiment plummeting, with a balance of 92 per cent predicting lower sales over the next three months, the Rics said.
Agreed sales also slumped in March while the national lockdown brought the number of properties on estate agents’ books to just 40 properties per branch.
While sentiment for the current quarter is gloomy, the longer term outlook remains generally upbeat and some experts think average property prices could rise by 2.5 per cent over the next five years. But, 42 per cent of insiders told the Rics they think prices will fall over the next year.
In the last month, Northern Ireland, Scotland and the South West of England all recorded the strongest growth in prices.
Simon Rubinsohn, chief economist at the Rics, said: ‘The results of the latest RICS survey capture the period during which the economy moved into lockdown so show a somewhat mixed picture. But critically, the key forward looking indicators clearly reflect the emergency measures in place.
‘The fact that responses are negative not just at the three but also the twelve month time horizon is significant in suggesting that the legacy of covid-19 could be such that any return to what might be described as “normality” in the economy will take time and households will remain cautious for a while.’
He added: ‘Tthe 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.’