This follows the shutdown of the sales market from mid-March to mid-May and it is expected to increase transaction volumes across the housing sector.
The market value of quoted developers has already risen this week in anticipation of the SDLT cuts, with shares in the likes of Redrow and Persimmon increasing by around 6%.
SME residential developers will also look to benefit as demand is likely to rise for a range of homes, whether starter units for first-time buyers, family houses, retirement apartments or buy-to-let investments. Statistics from Rightmove show that 81% of residential properties on its portal are under £500,000.
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Developers are also likely to see a shift in buyer preferences, as increased home working due to the lockdown influences future buying decisions. That, in conjunction with historically low interest rates and now the changes to SDLT, provide strong support for well-designed homes in the right location.
Higher volumes of housing transactions will also have a positive impact on associated sectors, such as construction, estate agency and home furnishing, amongst others; a healthy housing market with volumes not held back by high SDLT levels can help kickstart the wider economy.
Negative repercussions of these changes could potentially be seen in March 2021 as we reach the deadline when the SDLT changes are set to be withdrawn. During this period, we could see a rush from buyers to complete or exchange off plan before the cut off, followed by a subsequent lull in sales. This is also the period when changes to the Help to Buy scheme will also come into force, so it could be particularly challenging for a while as buyers adjust to the ‘new normal’.
The Chancellor has unveiled these changes in a bid to stimulate the housing market and provide support to those impacted financially by Covid-19. Whilst the possible benefits are evident, it will remain to be seen whether these changes will positively impact those suffering the most financially as a result of the pandemic.
Mortgage finance for people without a decent deposit is becoming more restrictive and for those that have been hit particularly hard, it is unlikely that a new property purchase would even be considered, so saving on SDLT isn’t a major issue.
Overall, residential developers across England and Northern Ireland with stock to sell over the next nine months will welcome these SDLT changes, which will help offset some of the uncertainty a more difficult economic environment may bring to the housing market.