The average residential property price has increased by more than £15,000 since June, ‘far outweighing’ stamp duty holiday savings on most properties, Britain’s biggest mortgage lender Halifax said earlier this week.
The stamp duty holiday unveiled by chancellor Rishi Sunak in July has been credited with fuelling a mini-boom in the property market. According to recent figures released by HM Revenue and Customs, a total of 105,630 residential transactions took place in October, with around £1.9bn raised from stamp duty in the third quarter of the year alone.
Halifax’s latest monthly house price index shows the price of an average UK home increased by 1.2% in November to £253,243.
The potential stamp duty holiday saving on the average home is £2,650, while the maximum saving on a property costing £500,000 or more is £15,000.
In comparison to last November, prices have risen 7.6% annually, which is the fastest rate of property inflation since June 2016. The data from Halifax suggests that valuations have soared by a hefty 6.5% since June.
Reflecting on the data, David Hannah, founder and principal consultant of Cornerstone Tax, commented: “The stamp duty holiday introduced by Rishi Sunak earlier this year provided a great boost to the market, which had run stagnant due to the initial lockdown. Whilst it has enabled the industry to avoid the most catastrophic consequences, it was never a long-term solution.
“Throughout other economic crises, stamp duty changes or relief have historically done very little to get the market moving again, and there is no reason why it would help this time around either. It has been and still is a poor tool for managing market behaviour. With low-deposit mortgages almost disappearing altogether, people are having to assess their options.
“The government needs to do more to help get people get on the property ladder; government-backed purchase mortgage guarantees for borrowers would be a great way to reinstall confidence in the lending market. If the term of these guarantees were for five years, for example, the inflation of the housing market during the medium term would wipe off any negative equity on those properties. This would give the market some security again, help buyers, and get the market moving again.”
Original Article from Property Industry Eye 10/12/2020