Abu Dhabi, UAEWednesday 28 October 2020

UK house sales rise 15.6% in August thanks to government's tax holiday

The chancellor's residential property stamp duty break runs until the end of March 2021

UK house sales rose 15.6 per cent in August following the roll-out of the government’s Stamp Duty Land Tax holiday, which helped to protect almost 750,000 jobs in the housing sector and wider supply chain, new HM Treasury data found.

The August increase followed a 14.5 per cent rise in July as more people decided to buy a new home or move house after the UK chancellor Rishi Sunak unveiled a break on SDLT for residential properties worth up to £500,000 (Dh2.3 million) at the start of July that runs until March 31 next year.

“Every home sold means more jobs protected … But this isn’t just about the housing market," Mr Sunak said in a statement on Tuesday. “Owners doing up their homes to sell and buyers reinvesting stamp duty savings to make their new house feel like a home are also firing up local businesses, supporting, creating and protecting jobs across the country.”

The stamp duty holiday is expected to also protect almost 750,000 jobs, benefitting businesses in the housing chain such as housebuilders, estate agents, tradespeople, DIY retailers and removal firms.

Retail sales data increased 0.8 per cent in August, according to the Office for National Statistics last week, with spending on household goods and home improvements experiencing a 9.9 per cent jump in sales when compared to pre-pandemic February levels.

Meanwhile, average house prices jumped 3.4 per cent over the year to June with the average house price at £237,834, £8,000 higher than the same month last year, the ONS said.

The SDLT holiday means that nine in 10 people buying their first home or moving up the property ladder will pay no stamp duty at all, with the measure delivering an average saving of £4,500, HM Treasury said.

The Treasury has announced that residential property transactions rose by 15.6% in August. The increase in transactions came after the Chancellor announced a stamp duty holiday at the start of July that will last until March next year.

“The stamp duty holiday is just one of several factors driving up house-buying activity at the moment. As we saw over the summer, there was a great deal of pent-up demand in the housing market as a result of the first lockdown, and the stamp duty holiday has further incentivised people to upgrade their properties, particularly as more of us are now working from home," said Nisha Vaidya, a mortgage expert at Bankrate UK.

“The surge in house-buying activity has driven prices to record highs, and many potential first-time buyers are now finding it much harder to get on the property ladder. Not only that, banks have also tightened their lending criteria in response to the economic recession."

Thirty-seven per cent of Britons say now is a good time to buy a property, according to a recent study by the Building Societies Associations, compared to 25 per cent in June.

A separate study from tradesmen site Checkatrade found that more than one in 10 Britons hope to buy a new home by the end of March 2021, with 33 per cent hoping to use the cash saving from the tax holiday on home improvements and renovations.

“Since the Government’s stamp duty changes came into effect earlier this year, we’ve seen record numbers of home improvement enquiries to the site suggesting that consumers are planning to reinvest their stamp duty savings straight back into their homes," said Mike Fairman, chief executive at Checkatrade.

Meanwhile, private housing output rose by about 30 per cent in July compared to June, making it the single largest contributor to the monthly growth in construction output that month, HM Treasury said.

Updated: September 23, 2020 03:56 PM

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