A leading analyst is questioning whether buyers have benefitted from the stamp duty holiday because demand has purshed up prices far beyond the savings possible.
Anthony Codling - the former Jefferies analyst who now leads PropTech platform Twindig - says London provides a good example, but is by no means the only location where buyers may not have benefitted.
Land Registry data shows that the average house price in London passed the £500,000 mark in November 2020.
“House prices in London have risen by 9.7 per cent over the last 12 months compared to an average increase in house prices across England of 7.6 per cent. In absolute monetary terms, this translates to an average increase of £45,241 in London and £18,875 in England” says Codling.
That means that in both London specifically and England generally, the increase in the past 12 months exceeds the largest potential stamp duty saving of £15,000. Indeed, in the month of November alone, house prices in London overall rose by 4.0 per cent or £19,698.
In one location, Ealing in the west of the capital, the price rise was 11.2 per cent or an average of £52,083.
While there have been exceptions in London - the City of London and City of Westminster boroughs have both seen price falls in the past year - Codling’s analysis shows that 21 of the 34 London boroughs have seen increases over £15,000 in the past year.
A separate recent analysis by Codling expresses doubt over whether buyers elsewhere in the UK have materially benefitted from the stamp duty holiday, which still have around 10 weeks to run.
“For a house costing £200,000, the saving is £1,500 and for the average UK house price - which according to Nationwide was £230,920 in December 2020 - the Stamp Duty Holiday saving would be £2,120 or less than one per cent of the purchase price.
“…The [maximum] £15,000 saving is often the figure which gets the headlines, but for most, the Stamp Duty Holiday saving will be considerably less … We can see that housing transactions are clustered around the £175,000 price point.”
Codling goes on to say that just over 15 per cent of housing transactions occur at or below £125,000 and therefore do not incur stamp duty - they save nothing, whether the holiday ends on March 321 or is extended in some form. And 50 per cent of transactions are at price points below £235,000 meaning they save less than £2,200 in stamp duty.
“Just under 12 per cent of housing transactions will save the maximum £15,000, which is at most a saving of three per cent of the purchase price. With the saving capped at £15,000 as the purchase price rises above £500,000 the relative saving decreases.”
Codling’s analysis follows data from HM Revenue & Customs, recording 129,400 sales in December 2020 – 31.5 per cent higher than December 2019 and 13.1 per cent higher than in November 2020.
This marked the strongest December for house sales in the past decade and the first time since 2015 that sales topped 100,000 in December. The provisional HMRC data takes overall 2020 transactions to 1,041,610 - that's only 11 per cent lower than in 2019, despite the market being closed for several weeks during the spring.
Codling concludes: "This is an astonishing result given the global pandemic and further evidence that a stamp duty holiday is not required, in my view."
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Didn't need it, was already busy. Should have held fire and used if the market faltered.
The lockdown and a change in working/schooling needs drove change in the market.
Deaths, divorces, requirement for more space or change of location created activity. SDLT was just a benefit, not the primary driver for many.
That SDLT income could have been spent supporting businesses through hard times rather than depleting the public purse any more than was necessary.
It only served as a marketing line of encouragement to act, and has now become a divisive subject causing undue stress and pressure on the entire industry.
The only good thing about the deadline is that it has driven the industry to think out of the box about how transactions can speed up, which has driven change in behaviours and paves a way to quicker transaction times with far less stress.
The long term future is bright, the immediate future looks traumatic, so strap in!
Big fan of Twindig too. Claim your Twindig and explore the system. It got us very excited about the shape of the digital future for property transactions. They are very pro Agent too.
I don't think anyone can deny it has sustained the market, although it would be interesting to see how the market fared without it, off the back of the post-first lockdown bounce.
As usual with this government, though, there was no exit plan, just a hard cliff edge deadline which then causes all manner of problems afterwards. Just look at Brexit and all the many small issues that is now causing.
I can see it being extended or tapered, even if JRM won't allow debates on it, so has the feel of another last-minute U-turn from Boris and co. They're good at that.
but there IS and always has been an exit plan. It has been clear since it launched that March 31st was the end date... how is that not an exit plan?
Sorry - not trying to start a disagreement, just confused as to why you say there was no exit plan?
I do however agree with you that there is a chance of another last minute u-turn to extend it/taper it off in some way
I guess my point is that a hard, fixed deadline (without any flexibility) inevitably causes problems, particularly when you're dealing with something as unpredictable as property transactions.
What happens to those transactions started well before the stamp duty deadline, but unable to complete before then, perhaps through no fault of their own? Do they still benefit from the stamp duty savings? When does the cut-off point come in? It would have been good to have the parameters set out.
The government could have said, if your transaction started before January 31, you will be eligible for the stamp duty holiday regardless of when the transaction completes. That way you don't get this mad rush which is going to see a lot of people angry and peed off - some 100,000 potentially, according to Rightmove.
This is old news I reported on this a when the SDLT holiday began, months ago, saying that property selling at 450k was now selling at 500k negating the SDLT holiday saving of 15k. Also the impetus to jump on the wagon and buy property would be to the determinant of the FTB, who would have bought at say £250,000, now faced due to increased demand the same property for £275,000, putting it further out of range. On the flipside, however you cut it up with 1.1M completions a year if the 12% figure is correct as the number who got a 15K maximum benefit - that is a huge chunk of change saved by buyers - a huge fiscal pulmigator.
Maybe start your own property news site, just a thought.
No one made any savings of course in any price ranges, bar those who got in early in July, as house price inflation, higher mortgage rates and fees from spooked lenders, increased costs in the supply chain all dwarfed any savings in stamp duty. Perhaps it's only getting more press now as the party is over and transparency is now unavoidable with published data that wasn’t available when many of us precisely predicted this outcome right at the start, dismissed at the time by most stakeholders who were benefitting from the activity. “If you buy during this stamp duty holiday, you are going to be out of pocket” is understandably not a message that many wanted to get much air time, from the Treasury down to suppliers at the coal face.
Spot on. Good to see a sensible and considered response. Estate Agency seems to have the inability to look past last week and forward to the next, only its positive news. Probably why no one took notice of Mr Stanton earlier in the year regarding SDLT.
The self congratulatory "Pats on the back for completions in December" really marks the end of a year that saw the lowest number of house sales since 2012. TwentyCi reported that only completions were only at 60% level in October, a comment once again replaced by as a story of wild sales from an Agent based upon "In my backyard'. as an indicator of the general market.
It was never about saving the public money.
It was about kickstarting the economy.
There are those that think the government care about them and there are those that think.
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