Marketing No Comments

Short-term lets and holiday homes surpass buy-to-let income

Short-term lets – and specifically furnished holiday lets – are now generating greater profits for owners than the traditional long-term buy-to-let model, but there are downsides.

In the aftermath of the pandemic, short-term lets surged in popularity, when staycations became the only way – or the preferred way – to take a holiday compared with overseas travel. Even after Covid restrictions were largely lifted, more people still opted to holiday in the UK than pre-pandemic.

But the property type had already been rising through the ranks as a property investment option for a number of reasons, including recent buy-to-let tax changes that meant some landlords paid lower levels of tax on holiday lets than buy-to-lets.

Some recent research conducted by Hamptons, using official data from HM Revenue and Customs, has revealed that in the 2020-21 tax year, income for short-term lets in the UK hit £15,600, while traditional buy-to-let income generated £13,400. This is the first time income has been higher for holiday lets.

Discover our Holiday Let Mortgage Broker services.

Long-term landlords moving to short-term lets?

However, while there have been many reports over the past three years indicating that some landlords have ditched the long-term for the short-term rental option, the data reveals that in fact only 1.5% of all landlords are holiday let owners.

Therefore, the vast majority of landlords still see the highest value from their long-term rentals, putting paid to rumours of large numbers of landlords ditching the traditional buy-to-let model.

When looking at how the furnished holiday let industry has grown over the years, the study showed that 63,000 people made an income from 65,000 lets in 2020/21, up from 46,000 individuals who owned 50,000 holiday lets in 2011/12.

The report notes that there are two main reasons that the short-term lets sector has grown so much, the first being that the majority of such properties are used for both personal and commercial purposes. The commercial side in particular has grown in recent years, adding to the figures.

The other reason, as touched upon earlier, is the ‘staycation boom’ that boosted demand in the sector to a significant level, leading to more landlords and homeowners taking the opportunity to let out suitable properties to fill the need.

Contact us today to speak with a specialist Holiday Let Broker to discuss how we can assist you

More income, same profit

Interestingly, while the report demonstrates the overall increase in income generated from short-term holiday lets, it also notes that due to rising running costs, owners of both property types end up with “a similar amount of cash in their pocket”.

According to Hamptons, running costs for a holiday let consume around 43% of the total income, while costs for a buy-to-let are around 31% of the total rental income, not taking financing costs into account. Furthermore, incomes are also currently forecast to fall back to pre-pandemic levels.

The maintenance costs that come with a furnished holiday let can include regular cleaning services, more frequent replacement of equipment and appliances due to the higher number of different guests, and more general wear and tear to carpets, fixtures and fittings.

Discover our Holiday Let Mortgage Broker services.

Often, landlords with holiday lets will employ an agency to deal with the general management of the property, including listings and comings and goings, which further adds to the costs of short-term lets.

On the plus side, aside from the higher income you could receive – particularly for a well-located, well-turned out property – you could also benefit from its use as a holiday home. The property must be furnished and available for at least 210 days per year to legally count as a holiday let, but the rest of the time you could you it yourself.

From a tax perspective, there can also be certain benefits to short-term lets, which you can read more about here. This article will also tell you more about the rules and regulations that apply to running a short-term let.

By Eleanor Harvey

Source: Buy Association

Marketing No Comments

Number of people staying in holiday homes jumps in decade, census data shows

There was a 4.7% increase between 2011 and 2021 in the number of people staying in a holiday home for more than 30 days per year.

Thousands more people were staying in holiday homes for more than 30 days per year in 2021 than a decade earlier, according to Census data.

The Office for National Statistics (ONS) released figures showing the characteristics of people in England and Wales with a second address.

It said there was a 4.7% increase between 2011 and 2021 in the number of people staying in a holiday home for more than 30 days per year, rising from 426,000 to 447,000.

The ONS said the peak age of people staying in holiday homes has increased, from 64 years old in 2011 to 73 years old in 2021, which it said likely reflects the size of this generation and their holiday home ownership ageing over the decade.

Discover our Holiday Let Mortgage Broker services.

In 2021, more than three-quarters (77.0%) of people who stayed at a holiday home were aged 50 and over.

Among people with a holiday home outside the UK, Spain, followed by France, were found to be the most popular locations.

Most people who stayed at a holiday home in the UK in 2021 were between 31 miles (50 kilometres) and 124 miles (200 kilometres) from their usual address, the ONS said.

More than 6,000 people in 2021 had a holiday home that was less than six miles (10 kilometres) from where they usually live.

Contact us today to speak with a specialist Holiday Let Broker to discuss how we can assist you

The average distance between a usual address and holiday home in the UK was 90 miles (145.7 kilometres).

Kensington and Chelsea in London had the highest proportion of usual residents (5.7%) who spent 30 days or more at a holiday home.

The Vale of Glamorgan (0.8%) and Monmouthshire (0.8%) were among the local authority areas with the highest proportions of people usually resident in Wales who stayed at a holiday home.

Overall in 2021, 3.2 million (5.3%) usual residents in England and Wales reported that they had a second address where they spend 30 days or more a year. This number increased from 2.9 million (5.2%) in 2011.

The largest second address type was another parent or guardian’s address, and the second largest address type was a student’s home address.

The number of usual residents who stayed at a second address while working away from home fell by 25.5% between 2011 and 2021.

Discover our Holiday Let Mortgage Broker services.

The ONS said it is important to consider the impacts of the coronavirus pandemic on the figures.

Students may have been more likely to be living with their parents for the whole year rather than using a different term-time address, for example.

The pandemic also prompted a “race for space” in the housing market, with rural and coastal locations being particularly popular.

Proposals were announced on Monday as part of a Scottish Government and Cosla consultation, that could mean councils could charge more than double the full rate of council tax on second homes.

The proposed changes would enable councils to charge up to double the full rate of council tax on second homes from April 2024, bringing them in line with long-term empty homes.

Figures show that in January 2023 there were 42,865 long-term empty homes in Scotland.

By Vicky Shaw

Source: Standard

Marketing No Comments

Airbnb properties are increasing in holiday hotspots

A new map reveals how a staycation boom since the pandemic has seen the number of short-term holiday lets swell in some of England’s most popular tourist hotspots.

Coronavirus and subsequent travel restrictions for foreign trips led to a spike in demand for breaks closer to home – with new data now confirming the enormous growth the UK holiday rental market has endured in just three years.

Kent is among the places to have witnessed a surge in the number of rented holiday lets available in the county – with a leap of 22% between 2019 and 2022.

According to the data, which has been compiled by the short-term rental analysis firm AirDNA, Blackpool, Lincoln, the Peak District and Dorset are also among the areas to have experienced some of the biggest percentage growths that put them close to the top of the chart.

Discover our Holiday Let Mortgage Broker services.

Dorset’s increase has sent the number of available holiday homes it is registering into double figures for 2022 with 10,782 short-term lets.

Other popular locations also experiencing an increase in listings through companies including AirBnB are Norfolk, Shropshire, Gloucester and the Lake District. AirDNA says it is also noticing ‘an extension of seasonality’ meaning that there is also an increase in supply and demand in the low season as well as at peak times.

Far fewer places are witnessing a decline in property numbers with London, Cambridge and Windsor among a small handful, says AirDNA to have recorded a drop in the number of holiday homes available.

Contact us today to speak with a specialist Holiday Let Broker to discuss how we can assist you

In Kent, Whitstable is among the county’s most popular tourist destinations – having previously been ranked the eighth most popular town in the UK for second homes.

But down on the coast residents have long-raised concerns about the town being packed with rentals and people’s second homes.

A survey carried out by the Canterbury Green Party in September last year, which collected close to 170 responses, revealed that 87.6% of residents had concerns about the impact short-term holiday lets were having.

At the time, Airbnb owners defended their properties describing them as ‘vital’ to the local economy – among them Labour councillor and Airbnb owner Chris Cornell who, while in favour of more regulation, said the homes have an ‘important role in Whitstable’s economy’ as they are usually cleaned and serviced by local people.

Speaking at the time, he explained: “Like most Airbnb owners, it’s not big business and we don’t own thousands of them or taking billions of pounds in.

“Most of us are people trying to share the town we love and support local business.”

Discover our Holiday Let Mortgage Broker services.

Concerns over the potential for rowdy guests could prompt a government crackdown on short term lets, according to new anti social behaviour plans.

An action plan published by the Government on Monday aims to stop holiday properties ‘importing anti-social behaviour into communities’.

Referencing noise problems, drunken behaviour and disorderly conduct, the plan promises the creation of a new registration scheme that would provide councils with the data to identify short-term lets in the local area.

If any short-term rental property proved ‘problematic’, local officials could then take action against its guests and owners.

Communities Secretary Michael Gove earlier this month expressed concerns about the impact of short-term letting on local areas, promising to make changes aimed at restricting “the way that homes can be turned into Airbnbs”, amid concerns about problems with holiday lets preventing younger workers from living and finding a job near to home.

By Lauren Abbott

Source: Kent Online

Marketing No Comments

Holiday let plans for farmland near Burton-in-Lonsdale

PLANS to develop working farmland at Burton-in-Lonsdale to create holiday accommodation have been submitted to Craven District Council.

Proposed by John Carr for land to the south west of Burton is eight new holiday units, a site entrance, service area, access roads, parking and landscaping.

Discover our Holiday Let Mortgage Broker services.

Other applications submitted to the council include: The part demolition and conversion of existing store/garage and piggery at Lower Windhill Farm, Cowling Hill Lane, Cowling to home office and sauna, and a single storey rear orangery with glass connection at 4 Nookdale Cottages, Dumb Toms Lane, Ingleton. Also proposed is installation of an electric vehicle charging point, and a new porous cobbled driveway at 8 New Hall Farm, Colne Road, Cowling; External modification including resurfacing the existing parking area at Greenfield House, Low Lane, Embsay, raising the retaining wall and making alterations to the patio.

Contact us today to speak with a specialist Holiday Let Broker to discuss how we can assist you

Planned for Procter House, Kirkgate, Settle, is the change of use of ground floor office and first floor residential accommodation to create two dwellings, and associated alterations.

Discover our Holiday Let Mortgage Broker services.

Craven District Council has applied for permission to erect a new metal sign over Victoria Street, Skipton at a height of around six metres (19 feet). The sign will say ‘canal quarter’, will resemble traditional narrow boat signage and is aimed at improving the visitor experience.

By Lesley Tate

Source: Craven Herald

Marketing No Comments

Will cost of living crisis renew holiday let demand?

Landlords diversifying into holiday lets could see renewed demand, as the cost of living crisis limits some people’s ability to holiday abroad.

When mortgage interest tax relief began to be withdrawn back in April 2017, landlords wanting to make smart decisions to maintain profits started to look around for solutions. For some, investing in limited company buy to lets presented a more tax efficient solution.

Holiday lets too offer tax benefits, as they are automatically classified as a business. As such, this niche within the buy to let sector has seen significant growth. Not least as a result of soaring demand, when the Covid-19 pandemic fueled huge interest in holidaying at home.

Reports in the media since suggest that the demand for holidaying in the UK has not dwindled. Whilst UK weather is not what you would call reliable, there is great appeal in avoiding the slog of an aeroplane journey at either end of your getaway.

What’s more, holidays in the UK are very flexible, and so the cost can be more easily controlled. So for those wanting a holiday but are strapped for cash, there is no need to finance a full 7 or 14 days more typically associated with going abroad. Holiday lets in the UK can easily be booked for 5, 10 or however many days make it affordable.

Not only this, but with no need to fly, the travel time cuts into your holiday far less, meaning a holiday at home for the same number of days can feel longer to one abroad, as you don’t necessarily lose the best part of two days getting to and from your house.

Contact us today to speak with a specialist Holiday Let Broker to discuss how we can assist you

Holiday let mortgage availability
When the Liz Truss and Kwasi Kwarteng mini-Budget became public, holiday let lenders – amongst many others – retreated into their beach huts, taking many of their products with them.

However, the good news is that with the economy settling, holiday let lenders are back, back, back.

Latest data from financial data analysts Moneyfacts shows that there are 411 holiday let mortgage products available to landlords in the UK, across 34 different brands. This is an increase of 233 holiday let products since October 2022 and an additional 8 lenders coming into the marketplace to offer lending solutions.

Discover our Holiday Let Mortgage Broker services.

New legislation from April 2023
On 14th January 2022, Michael Gove announced new legislation that cracked down on second home owners purporting to be offering property as a holiday let, but actually leaving them vacant.

The new rules come in on 1st April this year, and require holiday let properties to have been rented out for 70 days of the year in order to qualify for business rates and to avoid paying council tax. Evidence will be required in the form of website or brochure information for the premises along with letting details and receipts.

Not only will holiday let property have to be physically rented out for 70 days, but it must also be available to rent for a minimum of 140 days to qualify for the tax reliefs this sector benefits from.

The greater impact of this new legislation will be on those people with second homes who were not actually renting out their property to holidaymakers.

For most landlords looking to diversify their portfolio, these new requirements should not have significant effect, as renting out your property for as long as possible is the business objective.

Source: Commercial Trust

Marketing No Comments

Return of the ‘holiday home mortgage’ as families favour British breaks over Europe

Mortgage lenders and property investors are backing a staycation boom this year as families favour UK holidays over expensive trips abroad.

The number of mortgages available for holiday let owners has more than doubled since October amid renewed confidence amongst banks and building societies.

Investors can now choose from 411 deals, up from 173 three months ago, according to analyst Moneyfacts, and the number of lenders in the sector has jumped from 26 to 34.

Increased competition has also driven down borrowing costs for investors – the average fixed interest rate on a holiday let mortgage has fallen from 7.47pc to 6.17pc in the same period. Although costs remain inflated in comparison to the beginning of last year, when the average fixed rate was 3.92pc.

Contact us today to speak with a specialist Holiday Let Broker to discuss how we can assist you

Joe Stallard of House and Holiday Home Mortgages, a broker, said the price war between lenders came as investors who would have traditionally chosen to purchase a buy-to-let property instead turned to the holiday let market.

Mr Stallard said: “We’re definitely seeing more serious investors right now. There is increased demand for city-based properties, such as in Cardiff, York and Liverpool, and clients are keen to invest in properties that can be let all year round.

“Interest in the traditional areas like Cornwall, Devon and the Lake District remains strong, but investors are looking for more opportunities nationwide.”

The number of available holiday lets in the UK jumped by 14pc year-on-year to almost 340,000 in December, up from just under 297,000 in the same month in 2021, according to analysis by data firm AirDNA.

A surge in demand for staycations during the pandemic inflated accommodation prices and nightly rates have continued to rise despite a resurgence in foreign travel. The average daily rate for a holiday let in the UK was £167 last year, almost a third higher than in 2019 and a 14pc rise since 2021, according to AirDNA.

Discover our Holiday Let Mortgage Broker services.

More British households are expected to holiday in the UK this year rather than pay for flights as the cost of living crisis shows no sign of abating. The share of households planning to take long-haul flights has dropped from almost a fifth last year to 14pc in 2023, according to a survey of 2,000 people by lender Paragon Bank.

Meanwhile, the proportion of people intending to holiday in the UK has jumped from almost a quarter in 2022 to 28pc in 2023.

But holiday let investors will need to contend with stricter rules around tax and occupation this year.

Property owners in England who make their rentals available as short-term lets for 140 days a year can currently claim they are a small business, and therefore pay preferential business rates instead of council tax.

But the loophole will be tightened in April, when a property will only qualify for business rates if available for 140 days a year, and was actually let out for short periods totalling at least 70 days in the previous 12 months. New holiday lets will be liable for council tax until the property meets the new eligibility rules.

By Rachel Mortimer

Source: Telegraph

Marketing No Comments

Is Investing in a Holiday Home Worth It?

The idea of owning a property used as a place to escape to is certainly a luxurious one. Not everyone is lucky enough to be in a position to afford one property, let alone two! However, if you are fortunate enough to find yourself in this position, you might have already considered buying a second house or property to increase your assets. Property ownership can be costly, though, as well as a big responsibility to keep the place in good condition. This is why it is important to carefully consider whether purchasing a second house for a holiday home is worthwhile. Below are some of the key things you need to think about.

It Can be a Source of Income

As mentioned above, purchasing a second home and keeping up with the general expenses of looking after a house can put pressure on you financially. Even if you are doing well with money at this time in your life, that doesn’t guarantee that you will always be in this position. However, owning a second property can also be a great source of income if you are willing to lease this space to other holiday goers when you’re not using it. Many people choose to let their homes on sites like Airbnb or other letting agencies as this can help them pay off mortgages attached to that property and the maintenance costs. Leasing your home in this way will require some management to keep your guests happy and coming back, but if you are happy to do this, it could be a great way to make some money.

Contact us today to speak with a specialist Holiday Let Broker to discuss how we can assist you

A Variety of Options

It’s also important to remember that there are a variety of options available when it comes to choosing holiday accommodation to purchase. A lot of people might choose a pretty cottage in the countryside or a stunning beach house. Others might prefer a chic apartment in a vibrant city somewhere or a chalet in a ski resort. Of course, these are all excellent choices, but if you are looking for something a little more affordable but still comfortable, you can consider static caravans. There are many parks, like this one for caravan ownership in the Lake District, that can offer beautiful options for a holiday escape, and they won’t cost you as much as a property would.

Useful in Emergencies

Another good reason to invest in a holiday home is that it can be useful in emergencies. If your main home becomes compromised for some reason, you will always have somewhere else you can stay. It might not be in the ideal location, but for those who can work remotely or need somewhere suitable for their family to stay, this can be beneficial. Even if you choose to renovate your main house to create a better living environment, your holiday home could be used temporarily until this project is completed. You might also be able to help friends or other relatives who are in a difficult situation and need somewhere to stay.

Discover our Holiday Let Mortgage Broker services.

You Could Make a Profit

Leasing your holiday home will be a great way to pay off the mortgage and boost your income, but you might also be able to make a profit if you did choose to sell this property later on. Property prices have risen in recent years, and although this market can fluctuate, if you do sell at the right time, you might be surprised at just how much of a profit you could make. This is even better if you have been using rent to pay off the mortgage and might be left richer than before.

A Place to Make Wonderful Memories

Finally, owning a holiday home can be a benefit as it provides a special place for you and your loved ones to make cherished memories together. Many people look back on a place they visited for holidays in their youth with fondness, and your family could have this opportunity with your home. If the property doesn’t get sold during your lifetime, it could also be passed down through generations for them to enjoy. Whether you choose to spend your summers in this house or get the family gathered there for special occasions throughout the year, it will certainly become a happy place for you and your loved ones.

If you are thinking about purchasing a holiday home but are unsure if this is the right move, it’s smart to take some time to consider this carefully. These are all great reasons to move ahead with your plans, but you need to be sure that you are in the right financial position to make this investment.

By Max Livesley

Source: Silver Surfer Today

Marketing No Comments

Let’s hope holiday lets rules don’t go wrong

The short-term lettings market in Scotland is about to undergo a major change in the way it is regulated and operated. New rules, which take effect from this month for new properties entering the market and from April 2023 for existing lets, require landlords to apply for planning permission to operate a holiday let. This permission must be applied for regardless of there being any guarantee of acceptance, which means that substantial fees and legal costs could be incurred without any certainty that the planning application will be accepted.

While many understand that the short-term lettings market has been allowed too much leeway in the way it operates in terms of appropriate safety regulations and the numbers of properties operating in certain areas these changes have the potential to bring the market to a sudden, grinding halt.

In places like Edinburgh and the Highlands, which have the greatest number of holiday lettings in Scotland, the impact will be considerable, this policy could pose substantial problems for local communities.

The risk is that, while reducing the number of holiday lets may produce more long-term residential lettings properties for the community, it will have an impact on the tourism sector which provides local jobs. Reducing the number of available holiday lets also has the potential to reduce the attractiveness of the capital and the Highlands as destinations thereby potentially reducing the number of people employed in the tourism and hospitality sectors. There may be more homes available to rent but there may be fewer jobs for people to do so regulatory changes such as this need to be approached with caution. Every action has a counter action, and the general rule of unforeseen circumstances dictates that you make major changes at your peril.

Contact us today to speak with a specialist Holiday Let Broker to discuss how we can assist you

There are already signs that holiday letting landlords are selling up or shifting their properties from the short-term market to long-term. These landlords say that the requirements for planning acceptance are not transparent enough. It is not clear what planning permission is being sought and the delays in processing applications (at least nine months in the Highlands) means that the next holiday season would need to be written off. Finally, the costs of submitting an application with no guarantee that it will comply with the rules and be accepted make continuing in the market untenable for many landlords.

The result will be a loss of many thousands of holiday homes into the long-term market or for sale on the open market. This potential increase in the number of properties in the private rented sector is to be welcome, particularly in cities like Edinburgh where demand is higher than anyone has ever experienced before. But if it is accompanied by a downturn in the tourist market next year then many of those people who may have found a home may subsequently be unable to find a job.

Discover our Holiday Let Mortgage Broker services.

The issue with these changes is the vagueness of the regulation and the rapidity of its introduction. No landlord is going to be able to afford to lose an entire season of holiday lets so the delay in processing these is a key issue in forcing these properties out of the market.

Equally, a planning permission measure which restricts properties without a main door entrance is clearly targeted at Edinburgh which, like most Scottish cities, is largely comprised of tenements. Given that one of the key issues last year during the Edinburgh Festival was the cost of accommodation it is unlikely this will be improved by dramatically decreasing the stock available.

As ever with legislative and regulatory changes there will be consequences for the market, and it is unlikely that these will occur in the way which the politicians expected. The issue, as ever, is supply and demand. If you restrict supply prices will rise, if you increase supply prices will fall. We shall see what happens next summer, but I think that record prices for holiday lettings will be the order of the day in Edinburgh and elsewhere.

By David Alexander

Source: Scotsman

Marketing No Comments

Accidental damage leaves hefty bill for holiday let landlords

One in nine holidaymakers say they have accidentally caused damage to a holiday home according to new research by Direct Line business insurance.

In one in five cases this damage cost £200 or more to repair.

The survey suggests that 25 per cent of people who cause damage do not admit this to the property owner. Of these, almost a third felt too embarrassed to own up, 29 per cent did not want to pay for the damage and over a fifth did not think the damage was significant enough to warrant saying anything.

Among these, younger guests aged between 18 to 34 years old are the group most likely to cause accidents in rental holiday homes with over-55s typically being the most careful.

Contact us today to speak with a specialist Holiday Let Broker to discuss how we can assist you

Many guests also admit to treating holiday homes differently to how they would their own, with 42 per cent saying they treat them with less respect. Some of the main reasons are pre-assuming that the landlord’s insurance policy will cover potential accidental damage, not taking financial responsibility for any of the damage caused or not wanting to worry about such issues while on holiday.

According to landlord claims data from Direct Line business insurance the priciest types of accidental damage in 2021 were carpets and flooring damage (costing over £940 on average); water damage (£1,340) and soft furnishings and fixtures (£940).

Discover our Holiday Let Mortgage Broker services.

Many households are opting for ‘staycations,’ with 28 per cent planning a stay in a rented holiday home in the UK in the coming year.

Over a quarter have attributed this to the increased cost of living restricting how much they can spend on travelling abroad and 23 per cent are remaining in the UK to save money. A third are doing so to avoid ongoing issues with airports and airlines such as losing luggage, flight cancellations, and long queues.

A Direct Line spokesperson says: “Most holiday homes are not covered by standard home insurance policies, so it’s important that landlords find a holiday home policy that suits what they need and consider adding on cover such as accidental damage, legal expenses or loss of rent, to help deal with the financial fall out of unforeseen issues.”

By `Graham Norwood

Source: Landlord Today

Marketing No Comments

Truss to announce stamp duty cut – report

UK housebuilders rallied on Wednesday following a report that Friday’s mini-budget could include a plan to cut stamp duty.

According to The Times, prime minister Liz Truss will announce the move in the mini-budget in an attempt to drive economic growth. It was understood the PM and chancellor Kwasi Kwarteng have been working on the plans for more than a month.

Truss believes that cutting stamp duty will encourage economic growth by allowing more people to move and enabling first-time buyers to get on the property ladder, The Times said.

It cited two Whitehall sources as saying that cuts to stamp duty were the “rabbit” in the mini-budget, which the government is billing as a “growth plan”.

Under the current system, no stamp duty is paid on the first £125,000 of any property purchase. Between £125,001 and £250,000 stamp duty is levied at 2%, £250,001 and £925,000 at 5%, £925,001 and £1.5m at 10% and anything above £1.5m at 12%. For first-time buyers the threshold at which stamp duty is paid is £300,000.

During the pandemic, then chancellor Rishi Sunak lifted the stamp duty threshold to £500,000.

At 0910 BST, Persimmon shares were up 5.4%, while Taylor Wimpey and Barratt were up 4% and Berkeley was 3.5% firmer. On the FTSE 250, Redrow was 5.6% higher, while Bellway and Crest Nicholson were up 3.6% and 3.4%, respectively.

Tom Bill, head of UK residential research at Knight Frank, said: “Nobody can accuse the new government of lacking an economic vision. 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.

Contact us today to speak with a specialist Holiday Let Broker to discuss how we can assist you

“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.”

Neil Wilson, chief market analyst at, referred to the potential stamp duty cut as “the old Tory trick of juicing the housing market in its heartlands to boost confidence (wealth effect) whilst doing not a lot for housing supply”.

“I’m not for concreting over the green belt at all, but there will be questions about the economic soundness of this policy, as there always is. However, with interest rates rising so quickly, an offset to the cost of buying a home would grease the wheels of the market -without higher rates could cause the housing market to seize up.”

He added: “Clearly a stamp duty cut is good news for housebuilders who can expect higher selling prices as a result.”

Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, argued that a stamp duty cut could do more harm than good.

“Buyers are unlikely to be unhappy at the prospect of a tax cut, but if the government chooses to cut Stamp Duty in an effort to stimulate the housing market, there’s a risk it could do more harm than good.

Discover our Holiday Let Mortgage Broker services.

“It’s easy to see why the government is concerned about the housing market. We’ve seen demand fall consistently since May, when rocketing bills, rising house prices and ever-increasing interest rates started to take a toll on buyer enthusiasm. There’s a risk that if rate rises accelerate, pressure on buyers could reach a tipping point, where demand dries up.

“We know from very recent experience that a Stamp Duty holiday can stimulate demand. However, the only reason these holidays work is because people feel they have a small window of opportunity to take advantage, otherwise they’ll miss out. The point at which they think they can just wait for the next one, they will start to become less effective.

“Even if it does stimulate demand, it overlooks the fact that the real brake on the property market is a severe shortage of supply. With an average of 36 properties on each agent’s books, we’re still close to an all-time low in the availability of property for sale. Driving demand without addressing supply would risk more buyers chasing a tiny number of properties, which would push prices up.

“By ramping up prices at a time of rising mortgage rates, the end result would be higher monthly mortgage costs, which would be increasingly unaffordable. And the Stamp Duty holiday wouldn’t help on this front. This in itself could be enough to put buyers off, and if it deters enough of them, it could end up having the opposite impact to the one that’s intended.”

By Michele Maatouk

Source: Sharecast