Research by Alliance Fund shows the government’s recent decision to cut stamp duty could see thousands of new homes come onto the market.
The end-to-end real estate fund, founded by Iain Crawford and Austin MacAnthony, analysed the difference between how many new homes had been built over the stamp duty holiday and duration of the original scheme.
The company found that between 2020 and 2021, when the government introduced the tax break, 220,530 homes were built across England. A 16% increase compared with the 189,440 new homes built in the previous 12 months, the most recent figures mean 31,000 more homes reached the market year-on-year, with Londoners benefitting most. The capital saw 23% increase in stock, with 5,560 new homes built since the implementation of the stamp duty holiday. The East Midlands also saw a significant increase, with new homes rising by 20%.
CEO of the Alliance Fund, Iain Crawford, said: ‘A stamp duty cut is great for homebuyers, but while it’s sure to help cultivate demand for housing, there’s a good chance we may also see a boost to the number of new homes reaching the market.
‘The saving itself doesn’t apply to housebuilders, although some do stomach the cost of stamp duty on behalf of their buyers and so there is a marginal benefit to their profit margins,’ he continued. ‘However, the far more influential factor is the boost that a stamp duty cut will bring to the overall market sentiment, this is very much a wave worth riding for those delivering new-build stock to the market.’
Although the prices of buying a house have sky-rocketed over the past few months due to inflation and mortgage deals have been pulled by lenders such as Virgin and Halifax over fears of an imminent and rapid rise in interest rates to mitigate the impact of the recent ‘mini-budget’, Tom Bill, Head of UK Residential Research at Knight Frank believes the increase in housing delivery will eventually benefit the market.
‘Nobody can accuse the new government of lacking an economic vision,’ said Mr Bill. ‘If its low tax approach extends to stamp-duty, recent history tells us it will trigger higher levels of demand in the housing market at a time when mortgages are getting more expensive, which will support social mobility.
‘Prices could move higher in the short term if supply initially struggles to keep up, but more balanced conditions will return provided the cut is immediate and permanent.’
To read more about how the stamp duty announcement is affecting the housing sector visit here.
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