This article was first published in EAN on 8th February 2021
At present we are seven weeks away from yet another government-led housing market Armageddon. With over 35 years in the property industry, I have seen quite a few. Maybe it’s time to ask why?
I refer to the stamp duty land tax (SDLT) holiday that Rishi Sunak announced, the starting pistol for the present buying and selling stampede, with well over 100,000 sales looking to overshoot the dead stop date.
Recently some pundits have said that SDLT should be scrapped completely, but I do not think anyone was stating that SDLT was a bad thing. The cause for concern is that successive chancellors have tampered with it and other fiscal measures around the sales of property. Each time they do, the housing market and the people who buy and sell suffer.
From MIRAS (Mortgage Interest Relief at Source) in 1988, when Nigella’s dad announced the changing of rules (which caused a gold rush of buyers, a huge spike in prices, a cliff edge, nuclear winter and then a fall in house prices) to the changes around buying a second home with an extra burden of tax being applied, which meant that in 2017 a new wave of buyers bought a second property to avoid the tax, inflating prices, and distorting the shape of the market.
The present difficult situation imposed by Sunak means that with seven weeks to complete a sale, the market is now moribund. New vendors are sitting on their hands and not entering the market this February, waiting to see which way the governmental wind blows.
No one is saying no to SDLT, and for sure no one is saying scrap it and have a tax that cuts across all property assets owned by a person…maybe apart from the think tanks in Whitehall. What is being said, by 50,000 people in the real estate sector in the UK, is if a Chancellor wants to change something — and it relates to property — do it with an immediate date. Having a long-stop distant cut-off date always causes a big distortion in the housing market, followed by other sometimes negative reactions after a milestone date has been hit, with inevitable consequences for the years that follow.