The pandemic has given us all a chance to re-think the way we live and work. For government it presents a very real opportunity for a re-set. Not least in the housing market.
The Stamp Duty holiday, now expected to be extended, has been a roaring success, keeping the property market moving at a time when, if locked down like so many other areas of commerce, it could have simply stagnated. Instead, the market has never been busier. Too busy in some cases, as local authorities and conveyancing firms have struggled to keep pace with demand.
The success of the SDT holiday has persuaded a number of industry commentators that changes to the tax regime would be welcome – including calls to outlaw SDT altogether. At a time when the Treasury needs to claw back revenue to pay for the pandemic expenditure of the last 12 months, suggesting scrapping a tax that nets more than £2bn each year looks unrealistic. However, by injecting a bit of imagination, the government could drive positive future growth, which in turn would mean more money in the coffers.
First time buyers are already exempt from SDT if they are buying a home that costs less than £300,000. They are also expected to be given an additional bonus in the Budget, with the Chancellor expected to announce a mortgage guarantee scheme that would mean a return to 95% mortgages for those buying their first home. But what about the other end of the market? One idea being floated - and which we support - is applying an SDT exemption to older homebuyers to incentivise downsizing. This is a sensitive area but if approached correctly, two important opportunities could be opened up.
First, it could give a big boost to the retirement property sector which would have more incentive to expand and to create new types of development to meet the changing needs of older people. And second, by freeing up larger properties, an exemption of this kind would allow everyone to move up a rung on the ladder and create more supply at the lower end of the market.
Done right, that could be a win-win for the whole market.
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