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Today’s news reports that the stamp duty holiday could be extended by three months is something that would surely be warmly welcomed by property buyers and sellers - as well as investors in online estate agents Rightmove and Purplebricks and the housebuilders, such as Barratt, Berkeley Homes and Persimmon and co themselves.
The property market has boomed since the Chancellor announced a stamp duty holiday last year. According to provisional figures from HM Revenue & Customs, some 129,400 property transactions completed in December 2020. That compares to 87,040 in the same month in 2014.
Under the rules, which currently run until 31 March, the stamp duty threshold has been raised from £125,000 to £500,000 on property sales in England and Northern Ireland. In Scotland and Wales it has been raised to £250,000. The Times has reported that Chancellor Rishi Sunak will, at next week’s Budget, announce that the deadline of 31 March has been pushed back to the end of June.
The stamp duty holiday has certainly had the desired effect on the property market. After a subdued period, because of not only the pandemic, but also years of Brexit uncertainty, estate agents in England have since enjoyed an unseasonably strong summer, autumn and winter.
Savills, LSL Property Services and Purplebricks have all reported record levels of activity and property portal Rightmove said it had received more visitors to its website than ever since the property market reopened on 13 May.
Back in the first few months of 2020 though it had been a very different story. Forced to close for almost two months during the first national lockdown, sales ground to a halt. Rightmove, left with few options but to offer customers a 75% discount for April, May and June, suffered a 43% slump in first-half profits and scrapped its interim dividend.
For the six months to June profits dropped to £61.6 million, down from £108.1 million a year earlier, as revenue slid 34% to £94.8 million. There had been initial hesitation about the boom in sales, with suggestion that once pent-up demand had been satisfied, sales would subside as winter drew in. But that failed to transpire and while the approaching end of the current stamp duty holiday end-date has meant sales have started to slow, as buyers fear they won’t beat the deadline, an announcement of an extension in next week’s Budget would undoubtedly kick-start sales yet again.
Of course though, the prospect of the stamp duty being extended for a potential further period beyond the summer is less likely, despite think tank the Centre for Policy Studies calling on the government to permanently increase the threshold to £500,000. And so the property sector will have to settle back to more normal levels soon.
No doubt ahead of next week’s Budget attention will first focus on Rightmove’s announcement this Friday, when it will set out its full year results for the 12 months to the end of December. With the worst of the pandemic hopefully behind it, but also possibly the best of the Chancellor’s gift-giving also possibly getting close to the end, investors will be looking out for signs of whether Rightmove has what it takes to carry on building on the momentum of the past six months or so, turn around those dismal 2020 half-year results and find “its happy” in 2021.
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