Stamp duty exemption for first time purchasers buoys market
Transaction activity in the UK real estate market remains subdued but stamp duty exemption for first time buyers should be continued to help the industry, it is claimed.
The latest figures released by HMRC shows residential property transactions are well below the levels preceding the onset of the credit crunch, partly because of a shortage of mortgage finance as well as, until recently, the lack of stock on the market.
According to the figures, 76,000 property sales took place in June bringing the total for the second quarter of the year to 225,000. This compares with 216,000 in the first quarter and 260,000 in the final three months of 2009.
According to the Royal Institution of Chartered Surveyors the new coalition government should look at stamp duty as a means of boosting the real estate market. Its recent survey asked specific questions on stamp duty to assess the impact the stamp duty exemption might have on property transactions.
Some 89% of respondents across the UK agreed the stamp duty holiday should be maintained and 85% of respondents said that they believe the incentive will boost transaction activity by up to 10%.
One in ten suggested that the increase in sales would be in the region of 11 to 20%, with the remainder anticipating a gain in excess of this.
The low levels of lending though are also subduing the market. The latest figures from the Council of Mortgage Lenders (CML) gross mortgage lending in June was 15% higher than in May, but is still at a low level. An estimated £13.1 billion was loaned in June compared with £11.4 billion in May. The June figure is also 7% higher than in June 2009 but lending in the first half of the year totalled £65 billion, unchanged compared to the first half of 2009.
‘Our gross lending estimate of £13.1 billion in June represents a seasonal pick-up and is higher than June last year, but is still indicative of low levels of activity,’ confirmed CML economist Paul Samter.
Practical solutions are needed to encourage banks to fund mortgage lending, according to the Association of Mortgage Intermediaries (AMI). ‘All the main Banks face challenges to their ability to fund mortgage lending as the Special Liquidity Scheme reaches its repayment phase early next year. A practical solution is required that allows a sustainable mortgage market, so that consumers can look for a property safe in the knowledge that funds might be available,’ said AMI director Robert Sinclair.
‘With the emergency budget behind us we have more certainty about interest rates, taxation plans and likely levels of unemployment as the public finances are brought under control. We expect house prices to have a large degree of regional variation, with prices overall reaching the year-end much the same as now. Brokers continue to exert significant influence over the market as customers continue to use them to look across the market. This ensures they have the best chance of getting a mortgage that will allow them to complete on the property they want,’ he added.