On Monday, there was a debate responding to a petition on extending the stamp duty holiday beyond March 31, 2021. This decision was brought in by the Chancellor of the Exchequer, Rishi Sunak MP, who recognised the impact of the pandemic on this sector, last July with the aim being to give short-term relief for homebuyers at the height of the COVID-19 pandemic. This topic is something several of my constituents have raised with me over the last few months, both as homebuyers as well as commercial sellers.
Last summer, when the announcement by the Treasury was first made, the hope was this would instil a vital sense of confidence in the property market, which would help drive growth again - something sorely needed, with property transactions falling by 50% in May, and house prices falling for the first time in eight years due to the pandemic. Having spoken with constituents and local estate agents, I wholeheartedly agreed with the Chancellor’s welcomed decision, since the anxiety many constituents shared with me about purchasing a property was a reality for so many Mid Sussex residents.
However, seven months on, I am very pleased ONS figures show residential property transactions have substantially increased since the Chancellor announced the measure, which in turn has caused a positive ripple-effect throughout the entire housing market and construction industry. There is strong evidence to suggest the temporary cut to SDLT is having the desired effect, with a 14.5 per cent rise in residential property transactions in July, followed by a 15.6 per cent rise in August. This is in addition to the 30 per cent increase in construction activity in July.
I am therefore confident this action to support the housing market has protected and created jobs. In England and Wales, an estimated 240,000 people are directly employed by housebuilders and their contractors, and between 500,000 and 700,000 employees are indirectly supported in the supply chain. Moving to a new house also boosts the economy, with estimates suggesting that doing so drives additional spending worth about 5 per cent of the house value.
In addition, the acceleration in recent house purchases will also have a positive knock on-effect on estate agents and other businesses in the property sector, the latter having also shared their concerns with me as my constituents on how the pandemic has affected them and their business activity.
Having spoken with colleagues in the Treasury, I have been told it is currently not deemed possible to extend SDLT further beyond this financial year (March 31st 2021), although I do understand why the success of the SDLT holiday has led some to call for its extension.
In the Petitions Committee debate on Monday (February 1st), my Ministerial colleague, the Treasury Minister, Jessie Norman MP, emphasised how “it was the time-limited aspect of the measure that drove that increased demand, which is exactly why the end date of March this year was announced when the policy itself was introduced”.
To read or watch the Petition Committee session, visit https://committees.parliament.uk/oralevidence/1613/default/
We are certainly not out of the woods yet, but with the extremely positive development of over 10 million people receiving their vaccine to date, it is clear a renewed confidence in the economy is taking place and I would therefore encourage constituents if they are able to, to take that step to make a new start in 2021 through purchasing a home.
I will continue to engage with colleagues on this and see whether there are any further developments on this matter.
Details of the latest ONS figures on the housing market can be found here: https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/housepriceindex/november2020