Shock call that stamp duty holiday should have been shorter - RICS

A surprise statement from the Royal Institution of Chartered Surveyors says the stamp duty holiday, which goes on until the end of this month in a tapered form, should never have been extended from its original length.

The statement comes from Bradley Tully, RICS’ senior public affairs officer, who says: “RICS was supportive of the stamp duty holiday as a response to unique market circumstances last year during the height of the pandemic, though the scope of the holiday was arguably broader than we had anticipated and it should have been allowed to expire as originally intended.

“Over the long-term, RICS believes that an overhaul of stamp duty land tax should ultimately be delivered. Indeed, earlier this year the House of Commons Treasury Select Committee recommended that reforming stamp duty should be a priority for the government in their report, ‘Tax After Coronavirus’.

“We would urge the government to undertake a full-scale review of the current stamp duty land tax system to assess future ideal outcomes in terms of factors such as revenue generation and housing market fluidity. Housing affordability for first-time buyers and key workers should remain a crucial factor when considering access to the market too.”

Ironically the suggestion that the stamp duty holiday has gone on too long has come alongside a RICS housing market snapshot that suggests that the market is slowing - at least a little - following the end of the major element of the stamp duty holiday.

New buyer enquiries fell for a second month in a row, with a net balance of minus 14 per cent of respondents saying they had seen even fewer house hunters, following a minus nine per cent reading in July. Agreed sales also declined at the same time, with a net balance of minus 18 per cent reporting a fall.

New listings were down again with a net balance of minus 37 per cent reporting yet another fall – RICS says eight of the last nine months have seen new listings in negative territory. 

Consequently stock levels on agent’s books have dropped from an average of 42 homes per branch at the start of 2021, to stand at 38 in August, getting close to near record lows.

As a result of demand outpacing supply, respondents continued to report strong rates of house price inflation – with a net balance of 73 per cent saying they’d seen prices increase since the previous month’s survey. 

RICS economist Tarrant Parsons adds: “The latest survey evidence inevitably points to market activity taking a breather following the flurry of sales seen ahead of the tapered stamp duty holiday withdrawal. That said, while momentum has eased relative to an exceptionally strong stretch earlier in the year, there are still many factors likely to drive a solid market going forward.

“Nevertheless, given the real shortfall in new listings becoming available of late, there remains stong competition amongst buyers and this is maintaining a significant degree of upward pressure on house prices. What’s more, prices are expected to continue to climb higher over the year to come, albeit the pace of increase is likely to subside somewhat in the months ahead.”