James Pickford, FT.com on 04 Feb 2021, said: “Savills estimated that tax receipts were down by about £431m for properties costing less than £500,000. Under the terms of the holiday, no stamp duty is payable on the first £500,000 of a property’s value.”
“but receipts for £1m-plus properties were higher by about £110m, which Savills explained as a reaction to lockdown, the desire for more space and the sense of urgency provided by the stamp duty holiday.”
The stamp duty holiday has clearly created extra demand. It has tipped some people who previously were ‘on the fence’ into buying. Maybe they are trading up. Perhaps they are a first-time buyer. For every buyer, there needs to be a willing seller. The data will have other signals or insights. Let me speculate on a few. The SDLT holiday has created extra demand for homebuilders. Maybe a few investors decided to exit or otherwise rebalance by selling some units. I have heard of some student landlords selling portfolios. Investors who are at the point in their life that slowing down makes sense. A pandemic will cause some to make lifestyle changes.
The nine-month stamp duty holiday has made a bit of a splash in the UK housing market. Based on the Savill's data, the loss in tax receipts is not significant compared to everything else the UK Government is funding due to the pandemic.
What is a home?
Shifting focus, a more interesting observation for me is London's net migration. One recent report claims that London has seen a net outflow of 700,000 people. The FT article on stamp duty hints that people are moving up, moving out and moving on for more space. The 'working from home' and the need for homeschooling has shocked many into reconsidering their space needs. An extra room for the Zoom meeting has become more than a nice perk. If there are two working adults and school-age children, the space requirements are no longer extra or optional. Can you imagine music classes, business meetings and other live interactions happening if everyone had to work from the same dining table?