Ben Everitt is the MP for Milton Keynes North.
Whatever the reason might be for a home move – a new job, downsizing, more room for a growing family – it’s a decision that no one takes lightly.
The home moving process is fraught and emotional at the best of times. Families calculate budgets minutely, and finances are often stretched and squeezed in what is undoubtedly an incredibly stressful time for all involved.
Never has this been more clear than now, with the deadline of the Stamp Duty holiday creating a cliff edge for movers, and the risk of further costs, delays, and chains collapsing.
Rishi Sunak’s decision to provide a Stamp Duty holiday during the peak of the pandemic was brilliant. It has helped countless families to be able to move home. It was the right measure brought in at the right time to get the housing market moving, and it worked. It’s significantly stimulated the economy, with an almost 33 per cent increase in the amount of home moves made possible in December 2020 than the previous year.
However, the end of the Stamp Duty holiday is fast-approaching, bringing with it a can of worms for the property market and home movers alike, and a difficult decision for the Chancellor as he once again prepares to reach down the back of the sofa at Number 11.
It’s always the case with successful policies that we can find a way of viewing them as a victim of their own success. This one’s no different. In setting a defined deadline, there’s now a cliff-edge that risks undermining the benefits for which the Stamp Duty holiday was created. The holiday has undoubtedly achieved its aim of stimulating the market, but it also created enormous bottlenecks in the system as capacity within the property industry was stretched to the limit.
This crisis will mean that 325,000 home-movers could be at risk of losing out on the Stamp Duty savings through no fault of their own, according to data from TwentyCi. For many hard-working families on low and middle incomes, an unexpected bill of up to £15,000 would render the much dreamed-for house move impossible. This will be devastating for buyers who put time, effort, and emotional investment into moving home.
For many, this additional cost and stress will prove too much, and their dream home just may not be possible. The latest figures show over a quarter of home buyers would pull out of purchases if they missed out on Stamp Duty savings. The effect of this will be widespread chaos and delays, as transaction chains collapse throughout the market. They say you can’t put a price on dreams, but the estimated loss of value from the housing market in dropped transactions is £3.4 billion.
There’s also the timing to consider. The Stamp Duty holiday is due to end along with a whole raft of other Covid-related support measures. On average, UK home-movers spend £4,000 in painting, decorating, and general renovations in the year they move home. These trades have been kept alive by the Stamp Duty holiday. Tens of thousands of redundancies and bankruptcies avoided. Small local businesses, the backbone of our economy, saved.
If we phase out business and job support at the same time as ending the Stamp Duty holiday we risk a double whammy for local tradespeople and SMEs. While the forgone receipts to the Exchequer for SDLT are indeed greater than the receipts from the additional trade, the real value of the policy has been in sustaining the jobs and businesses. We need to do everything we can to keep people in work and keep businesses going at this crucial point. Investment in jobs now will pay off in the medium and long term.
The Treasury has rightly made much of its commitment to get the economy moving again as we turn to a 2021 recovery. Ensuring the housing market is thriving is central to this. To continue to boost our economy, we need to help the housing market, not burden it with a dangerous cliff edge.
This is why I would ask the Chancellor to consider the merits of a short extension of the holiday until we are through the most acute phase of this crisis. This would allow the industry time to rebuild capacity, process the backlog of work smoothly, and realise the benefits of the demand this successful policy has generated.
The Stamp Duty holiday has succeeded in revitalising the home moving sector and as a key plank of the Government’s plan for jobs – it would be foolish to taint its legacy by hampering home movers when we should be helping them most.