Analysis: how will the stamp duty holiday affect the housing market?

Analysis: how will the stamp duty holiday affect the housing market?

Will the stamp duty holiday boost sales and house prices?

By Martina Lees

We’re not going on a summer holiday, but — as Cliff Richard didn’t sing — at least we’re getting one on stamp duty. Will that boost a recovery in the housing market?

Despite an all-time record of 8.5 million visits on the Rightmove site the day after the chancellor announced the tax break, the answer is far from simple.

Most economists expect consumer confidence to dip towards October, when the government is planning to stop paying the wages of furloughed workers and mortgage holidays are due to come to an end. Then there will be more uncertainty over the risk of a no-deal Brexit as Britain’s transition deal with the EU ends in December.

The stamp duty break is going to be valid until March 31, 2021 — far longer than originally anticipated — and is being timed to reduce the impact of unemployment and economic uncertainty on the housing market.

Announcing the measure, Rishi Sunak pointed out that housebuilding supports almost 750,000 jobs, but that “property transactions fell by 50% in May”. He went on to say: “House prices have fallen for the first time in eight years, and uncertainty abounds in the market . . . We need people feeling confident — confident to buy, sell, renovate, move and improve. That will drive growth.”

According to a forecast from the Centre for Economics and Business Research (CEBR), the policy will lead to a 6% rise in property transactions — that’s 41,000 extra sales — over the next nine months.

However, Jon Bell, a housing analyst for Deutsche Bank, warns that while the measure will push up sales temporarily, this will come to an end when the holiday period finishes in March. He explains: “For petrolheads, this is a jump-start, rather than a new lithium battery.”

Bell also points out that the policy won’t actually make much of a difference to prices. For example, a home mover buying a £250,000 property would save only £2,500 (1%) of the price in stamp duty. The buyer of a £500,000 home would save £15,000 (3%), with the relative saving falling above that level.

An HM Revenue and Customs study has also shown that a two-year stamp duty holiday from 2010 for first-time buyers on homes under £250,000 only ended up pushing up house prices by 0.5-0.7%. And buying a house is such a significant financial decision that in times of uncertainty “not many people will commit before the outcome is clearer,” says Jamie Durham, an economist at the consultancy PwC.

The CEBR is forecasting a 5% fall in house prices this year and a further 10.6% drop in 2021 before they start rising next autumn. Pablo Shah, its housing economist, predicts a slow property price recovery in the shape of a “Nike swoosh” — as do Bell and Durham.

“Unlike previous economic crises, it’s not founded on structural imbalances in the housing market. We expect prices to recover as people’s incomes recover,” Shah says. “We’re not expecting any kind of boom.”

At least one non-economist disagrees. Rob Bence, the co-founder of the Property Hub investor podcast and forum, has made his boldest prediction in seven years of broadcasting: “We’ve never had this much financial stimulus injected before.

“We won’t just head into a recovery, we’ll be pushed into an almighty economic boom . . . It won’t happen immediately, but it’s coming. When the boom comes it’ll be at a scale we’ve never seen before.”

Lu believes that this view is overly optimistic, but Andy Haldane, the Bank of England’s chief economist, has claimed Britain is on track to rebound faster than expected — in a V-shaped recovery.

Ultimately the stamp duty cut should boost jobs for housebuilders, estate agents and conveyancers — and even homeware shops and garden centres, if buyers spend their savings on a sofa or an outdoor dining set. However, Bell warns that the cut is “best seen in the context of an 86% year-on-year fall in mortgage approvals in May” — a worrying sign for future volumes.

Does a stamp duty holiday go far enough — or should we abolish it altogether?

By Hugh Graham

Abolish stamp duty. It has been the mantra of high-end estate agents ever since the then chancellor George Osborne introduced reforms of stamp duty land tax (SDLT) in 2014, which made buying a house cheaper for purchases under £937,000 — 98% of households — but more expensive in Mayfair. Even after last week’s stamp duty holiday was announced for purchases under £500,000, Home’s inboxes were full of emails from top-end agents saying Rishi Sunak did not go far enough.

Take Enness Global, a high-net-worth mortgage broker. It argues that although buyers in prime central London — where the median sold price is £4.92 million — will save £15,000 under the new reforms, buyers on a £14.1 million home will still pay £1.6 million in tax. “High-end homeowners certainly won’t be getting any richer thanks to Rishi,” says its chief executive, Islay Robinson. “This archaic tax continues to leave a bad taste in the mouth of prime buyers. It’s about time this government money-grab was abolished completely.”

Trevor Abrahmsohn, director of Glentree International, an estate agent in north London, argues that ever since Osborne’s 2014 reforms, “transaction numbers have been reduced by 70%, and the cost to the Treasury has been between £5 billion and £12 billion in lost taxes”.

These industry arguments have become so pervasive that they have filtered into the mainstream. Andrew Pierce, a journalist, said on Good Morning Britain this week: “When George Osborne was chancellor he massively increased stamp duty, and what happened? Less money came into the Exchequer.”

However, the claims of lost revenue are a myth. New figures from LonRes, a property data company, reveal that HMRC’s stamp duty receipts have been higher every single year since the reforms were introduced in December 2014, by at least £1 billion annually. Before they were introduced they stood at £6.45 billion for 2013/2014. For the year ending 2019/2020, ending March 31, they stood at £8.39 billion.

It is true that transaction levels above £1 million fell 30% between 2014 and 2019, according to LonRes. Abrahmsohn argues that the lower activity at the high end reduces other revenues such as pay as you earn, VAT, capital gains and corporate tax, but doesn’t have figures that show this reduction is significant enough to offset the government’s increased stamp duty revenues since 2014.

Camilla Dell, founder of Black Brick, a London buying agent, would welcome tax cuts at the top end, but is resigned to the status quo. “I can’t see it happening politically. They’d be accused of being a party for the rich when they are trying to help the north. Sunak’s reforms gave my buyer on a £2 million flat in St John’s Wood an extra £15,000. I think this is as good as it gets for us.”

Henry Pryor, a buying agent, is one of the few agents to defend George Osborne’s 2014 reforms, saying the higher rates stopped double-digit house-price inflation in Notting Hill and Chelsea, deflated a bubble and helped 95% of buyers. “Osborne deserves credit. The reforms did exactly what he wanted. It brought prices down.”

Times are of course very different now, but he can’t see the government scrapping or cutting stamp duty at the high end, not least because, contrary to what many agents say, SDLT is still a cash cow for HMRC. “I would imagine the government has done its sums. Sunak’s policies helped 90% of the people, but the Treasury is enormously dependent on the top end for revenue. Something like 45% of the SDLT revenue comes from the £1 million-plus market. We need some of these deals so we are at least getting some revenue.”

Come on, super-prime buyers: splash out to help out.

What does selling off market mean?

There are clear signs that “private” sales are going mainstream

By Melissa York

Pssst… are you “off-market”? No, I don’t mean married — is your house on a secret list of properties for sale? Though this practice sounds clandestine, all it means is that you’ve chosen to keep your house out of the public domain, away from browsing eyes on Rightmove and Zoopla and out of high-street windows. Instead, estate agents trade these homes among themselves, matching them with the requirements of registered off-market buyers.

While buying and selling this way isn’t new, there are clear signs that “private” sales are going mainstream. Once the exclusive preserve of oligarchs and celebrities who didn’t want the contents of their home splashed all over the internet, the practice has moved further down the market in recent years.

“We used to be dealing in £20m properties, but now it can be anything from £1m upwards,” says Caspar Harvard-Walls, partner at the buying agency Black Brick. He estimates that the number of off-market properties on his books has risen from a quarter in 2018 to a third in 2019.

“I was looking on behalf of a buyer who had a £4m budget. I found six houses that met their specific brief and not one of them was on the open market.”

And this phenomenon isn’t limited to the chattering classes in the capital. Agents at Carter Jonas in York have also noticed an increase in off-market sales in the middle market, up from 10% of listings to 15% over the past year.

While there are many personal reasons one might go off-market — security for starters, as you will discover in my feature — the internet has played a significant role. Selling your home is just a lot more public than it once was. Now any buyer can see how long your home has been on the market, how much you bought it for and the value of similar homes in your street at the click of a button and a scroll of a mouse.

In 2018, 26% of homes on Rightmove, the UK’s biggest property portal, sat unsold for more than six months. If a buyer sees this, they will start to think it isn’t selling because there’s something wrong with it and will sniff a discount in the offing. Properties that have had a price reduction on the open market are also doomed to a similar fate. Those kept off-market, on the other hand, retain a certain mystique.

In an uncertain time, perhaps it is smart that buyers are testing the water in this way, rather than hanging their dirty discounts out for everyone to see. Maybe this trend isn’t clever at all, but merely a sign of the times. Harvard-Walls links the rise in estate agents leaving big firms to set up on their own as independents to this trend. Like artisan coffee, craft gin and boutique hotels, perhaps going off-market with a buying agent simply seems like a rarefied, fashionable way to sell your house these days.

Speaking of hipsters, new research from Jackson-Stops has revealed an unusual penchant for high ceilings among millennials. The estate agency conducted a survey asking more than 2,000 UK adults to name their favourite architectural period features (niche, I admit). Lofty ceilings ranked fourth, with 28% picking them, behind bay windows (38%), grand open fireplaces (37%) and a country-style kitchen (29%).

However, when only 18- to 34-year-olds were included, high ceilings came out on top, with more than a third (36%) saying it was their most desirable period feature. Londoners were also especially keen on raising the roof (35%). Perhaps this isn’t such a mystery when you consider the cramped conditions in many new-build high-rise flats — the only option young people have in the capital if they want to purchase their first home using Help to Buy. A head-banging conundrum if ever there was one.


Where Britain’s youngest millionaire’s live

By Melissa York

Knightsbridge, Chelsea… Reading? Melissa York reveals the property portfolios of the under-30 and minted.

Among them are Ben Francis, 26, owner of the online sportswear retailer Gymshark, who made his first appearance in ninth place, with a fortune of £73m; and the Wellingborough-based vlogger Dan Middleton, who swapped stacking shelves at Tesco for playing games on YouTube, and is worth £25m at the tender age of 27.

Unlike bankers, young tech buyers can work from anywhere, so location is less of a concern. According to the 2018 Tech City Index by TNT Direct, these purchasers look at broadband speeds and the quality of an area’s tech graduates before they decide where to base themselves. University cities score highly, particularly Bristol (ranked second), Leeds (third), Edinburgh (fourth), Cambridge (seventh) and Oxford (10th), but unheralded Reading tops the list, thanks to its solid base of tech jobs and a strong start-up survival rate.

Yet the cultural draw of London often proves too much, which is why the capital lands at sixth place on the index. Tech entrepreneurs who have made it in the Big Smoke love a fixer-upper or an east London warehouse conversion: the chance to add mod cons and personal features is seen as a bonus. Jo Eccles, managing director of SP Property Group, says she helped a tech entrepreneur build up a portfolio of 16 properties; for himself, he bought a £7m house in Notting Hill, with skylights instead of windows, that was in dire need of renovation. “It was very much about buying a blank canvas that he could turn into something futuristic and amazing.”

YouTubers, on the other hand, are a mixed bunch. Zoe Sugg, aka Zoella, gave her 16m subscribers a tour of the five-bedroom Brighton house where she lives with her boyfriend and fellow vlogger, Alfie Deyes, which was bought for £1m, according to reports in 2017. Deyes has made no bones about being a serial property investor, telling his subscribers in the same year: “I own quite a few properties that I’ve bought over the years, and I’m a landlord to people. Obviously, I don’t meet them and do all that kind of stuff — I have people who do that for me.”

Among the top property investors on The Sunday Times Young Rich List are the singers Rita Ora, who has bought in the UK and the USSTARTRAKS PHOTO/REX

Vloggers often have their pick of interiors, too, with brands willing to furnish their homes free or at a discounted rate in the hope of being featured in the background of a video. “Even the windows,” Eccles says of one client. “He got bumped right to the front of the queue so it would all be in place for his YouTube videos.”

Creatives such as actors and musicians tend not to have much time to lavish on their homes. Dictated to by gruelling schedules, which often include international travel, they are looking for turnkey properties that require the minimum amount of work. Staying close to the capital’s airports and cultural credentials, these young stars are looking for a discreet party pad that will impress their famous peers.

Exclusive research from Savills estate agency reveals the number of under-30s in each ward in the UK who fall into Experian’s City Prosperity grouping, defined as those who “work in high-status positions: commanding substantial salaries, they are able to afford expensive urban homes”. Greenwich West topped this list, with the newly developed Greenwich Peninsula also featuring in the top 20, alongside Balham, Brixton Hil and Herne Hill — all popular areas with the creative set.

“When it comes to affordability, these young people haven’t had the time to build up the same level of equity as the previous generation, who are still living in established wealthy areas,” says Lawrence Bowles, senior analyst on Savills’ residential research team. “So these places don’t come across as attractive for hip young things, who would rather live in Brixton than on the King’s Road.” Marylebone and Fitzrovia are also touted by buying agents as hotspots for creative types, due to their proximity to Soho’s arty private members’ clubs.

Among the top property investors on The Sunday Times Young Rich List are the singers Rita Ora, who has bought in the UK and the US, and Ed Sheeran, whose estate in his home town, Framlingham, Suffolk, hit the headlines recently after it caught fire. The property, made up of four adjacent houses bought piecemeal, reportedly has its own pub and a four-room treehouse.

The former child stars of the Harry Potter films also have the magic touch: Daniel Radcliffe is said to have £76m in assets, though it’s unclear how much is invested in property, while Rupert Grint has been candid about his ‘big’ £12.9m portfolio, mainly concentrated in Hertfordshire. Emma Watson’s three-bedroom London mews property attracted attention after the Panama Papers revealed that she bought it for £2.8m through an offshore company in 2013. Her representatives say this was done to keep her purchase private.

For under-30s making a more pedestrian, but still affluent, living in the traditional professions in the City, the parts of Wandsworth nicknamed Nappy Valley — Earlsfield, Fairfield and the Common — figure strongly in the Savills table as enduringly popular places to buy a first family home. Edinburgh is also teeming with rich young things, both around the city centre and to the north, in Inverleith.

Anecdotally, it seems the wealthiest of the young rich also have the least freedom when it comes to where they buy. Under-30s who buy with inherited wealth tend to choose only the most established areas in the country — Kensington & Chelsea, Hampstead and Notting Hill — before moving to the countryside to take on the family pile. There is usually a team of wealth managers, lawyers and trustees behind such decisions, and a final sign-off from Mummy and Daddy is non-negotiable.

“We’ve never had an inherited-wealth client where the parent hasn’t had the final say,” says Eccles, who recalls one memorable occasion when a landowner in the north of England took a helicopter down to London for the day to approve his daughter’s purchase in Pimlico.

Hugh Grosvenor, 28, better known as the Duke of Westminster and Prince George’s godfather, is the richest person in the UK under 30, with a fortune of £10.1bn. In addition to the 300 acres of Mayfair and Belgravia that the family owns, it has assets in 60 cities overseas, but its historic seat is Eaton Hall, Cheshire.

Apart from a stint on the Grosvenor Group’s graduate scheme, the Duke has chosen to pursue his own interests, working in Bermondsey for the start-up Bio-Bean, which turns coffee grounds into clean energy. His slice of the Grosvenor pie is shared with his three siblings, but all its assets are tied up in a series of trusts to prevent any squandering of the family fortune. This is a common arrangement for wealthy heirs. “They’ll have a succession plan in place outlining how they’re getting the money,” says Tom Kain, of Black Brick. “That’s why they’ll tend to choose a safe investment that’s about capital growth and wealth preservation.”

Parents of the super-rich also tend to keep their children close to their own homes. “I can think of one billionaire who had a home in Knightsbridge, and two sets of children and his mum were all within a five-minute walk of him,” says Robert Watts, compiler of The Sunday Times Rich List. “These people worry just as much about their children as their businesses, because everyone’s got a story about so-and-so’s child ODing on something. The leash will be let out, but only so far.”

Young, rich and famous, but forced to live in Knightsbridge. It seems you can’t always get what you want.

How to deal with sealed bids

By Graham Norwood

Offer too much and you’ll overpay; offer too little and you’ll miss out for ever. Here’s our top tips for handling this one-shot opportunity

It’s enough to make a buyer’s heart sink: just when you think you’ll make a killer offer on your dream home, the seller asks for sealed bids. This means all interested buyers are requested to submit a bid in a sealed envelope by a set date. It’s a one-shot opportunity: offer too much and you’ll overpay; offer too little and you’ll miss out for ever.

It’s made worse because sealed bids — also known as “informal tenders” — are one-sided affairs. The vendor and agent have all the information on the property, its condition, rival offers and the deadlines and motivations behind the sale. The buyer has… well, not much at all.

Does this process only happen when the local market is strong? 
Not always. Sealed bids often crop up for “really high-quality, best-in-class properties”, says Caspar Harvard-Walls, a partner at Black Brick buying agency. “As an extreme example, an unmodernised detached villa in Holland Park, west London, went on the market at about £13m. A round of sealed bids later, it sold last month for more than £18m.”

In a buoyant location, sealed bids can be used to heighten attention and offers. Yet Jeremy Leaf, who runs the north London estate agency Jeremy Leaf & Co, sounds a note of caution: “The whole process could be a bluff in a slower market by owners and agents trying to fool the few prospective purchasers that demand is stronger than it really is.”

Can a buyer find out who they’re bidding against? 
It’s not easy, but if you push an agent or seller, you might wheedle out vital intelligence. “For example, if you’re only bidding against one other party who needs a mortgage, you may decide to make a slightly lower bid,” Harvard-Walls says. “If you’re bidding against five others who are all cash buyers, you may choose to go higher.” Canny bidders will seek out the vendor’s social-media accounts to see if they’ve blabbed online about why they are moving.

What counts in a bid? Is it just down to price? 
Obviously, the amount offered is crucial, but in a difficult market where a third of agreed sales fall through, costing an average of £2,899 in wasted fees, according to Market Financial Solutions, you should also use the bid to convince the seller that you’re ready to go, without complications.

Remember, there is no obligation for a vendor to choose the highest bid. Agents often advise that a lower offer is preferable if the sale that follows has fewer potential pitfalls.

So what should go in the bid letter?
Anything that gives you the edge as a buyer. Specify if you’re chain-free and/or a cash buyer (and how long it would take you to draw down the money), and provide a copy of the in-principle loan agreement should you need a mortgage. Give your conveyancer’s details and tell the vendor what stage your own sale is at.

Don’t be afraid to pull at a seller’s heartstrings. In America, it’s common to include a letter, with pictures of your family, to demonstrate how much you love the house and how it would be great for your kids/dependents/dog. Estate agents in catchment areas for sought-after schools say the idea is catching on over here, too.

Any clever tricks? 
If you’re super-keen, commission a survey of the house you want to buy before bidding. If no horrible problem surfaces, you can make an offer with the genuine promise that it’s not subject to a survey — another advantage over rival bidders. Instruct your solicitor to begin basic searches on the property, too, and let the seller know to emphasise that you’re willing to move quickly.

Vendors should be thinking ahead, too. Leaf says they should make some legal information available to would-be buyers during the process and have replies to conveyancer inquiries ready to go as soon as an offer is accepted. “After all that effort, owners would not want to be responsible for a sale falling through.”

What price should a buyer offer? 
This is the trickiest bit. The property portals Rightmove, Zoopla and OnTheMarket will give you an idea of other asking prices in the area, while websites such as and show what has been paid in the recent past — but that may be some months or even years earlier, and the market will have changed in the interim.

Obviously, you should put forward a sum you can afford — and remember, if it’s far more than a home is worth, your lender may not advance as much as you want. Mortgage firms make their own valuations, and you could be left high and dry if you bid wildly and can’t borrow enough.

The National Association of Estate Agents recommends avoiding round numbers so that you don’t find yourself making the exact same bid as someone else — you could bid £500,025 instead of £500,000.

And if I don’t win, that’s it? 
Not necessarily — if you’re determined to get that house, keep in touch with the agent in case the successful bid falls through.

How I Made It

How I Made It

Camilla Dell

The Sunday Times


House hunting for wealthy business people and foreign multi-millionaires is no easy job. One couple wanted a £10m house perfect for a chihuahua, “with no balcony and the right outside space”, while some superstitious buyers would only consider addresses with numbers “that didn’t mean death”.

It pays well, though. Camilla Dell’s property agency, Black Brick, which she set up in 2007 using £20,000 of savings, made a pre-tax profit of £1.6m on sales of £3.1m last year.

After working for the upmarket estate agents Knight Frank and Foxtons, Dell decided that finding homes for a fee could work as a standalone business, rather than just being a service offered by the chains.

Black Brick helps investors and companies, as well as individuals, find homes in London and southeast England, negotiates a price, and closes the deal for them. It does not own properties, or handle the listings.

Dell recently helped a member of a Middle Eastern royal family to buy a £55m mansion, and a Bollywood actress has just signed up for her services. It is not just the super-rich who come to her, though. Recent buys include a two-bedroom flat costing £374,000.

About 60% of customers are from the Middle East, Russia, India and America. Critics have accused property buying agents of fuelling the surge in so-called ghost homes in London. Last week the mayor, Sadiq Khan, called for local authorities to be able to raise the council tax on properties left vacant.

“There’s a misconception that buying agents are only for the very wealthy and for people who are going to buy homes here and leave them empty,” said Dell, 39. “We’ve got our oligarchs, but we’ve also got very normal people.”

She said that less than 5% of the properties bought by Black Brick were ghost homes. “We’ve never been a volume business. We don’t have to pump out hundreds of deals to survive.”

Clients pay an upfront, one-off registration fee of £3,000. If Black Brick seals a deal, it gets 2.5% of the final price or 20% of what it manages to save customers by negotiating a lower price.

Dell, the managing partner, grew up in Hampstead, northwest London, as the youngest of three children. Her father, a property developer, died when she was 9. Her mother, an Israeli former model, was a “lady of leisure”.

Dell was a boarder at Cobham Hall, a private girls’ school in Kent. She qualified as a scuba-diving instructor at 18 and studied marine biology at Newcastle University. Once she graduated in 1999, she worked behind the scenes at the broadcasters Tyne Tees and Granada. After a year she moved to Egypt to teach scuba diving, but returned following the 2001 terrorist attacks. “The number of tourists just dropped off,” she said.

Dell spent the next six years climbing the ranks at Foxtons and Knight Frank before striking out on her own, not without some trepidation. “I had sleepless nights setting up Black Brick and coming off the payroll.”

She started hiring after six months and by the end of the year had tied up sales of £1m. Today the business, based in Mayfair, has nine staff. Dell is the sole owner, and does not rule out an exit if “someone makes an offer you can’t refuse”.

Dell lives in Hampstead with her husband, Jeremy, 49, and daughters Sydney, 5, and Sukie, 2. Her advice for new bosses is to put in long hours: “I don’t believe in shortcuts. You have to learn and understand your industry.”

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