Investors Keen on SDLT Holiday, But Wary of Government’s Handling of COVID-19

Looking ahead, it may be daunting to think how the UK will fare when attempting to facilitate a post-COVID-19 economic recovery.

Jamie Johnson, CEO of FJP Investment, looks into the resurgence of the UK property market and how the government could sustain it.

After so many months in lockdown, attracting the investment needed to help bring back market activity to pre-pandemic levels is by no means an easy task. However, there have been some signs that government initiatives have, thus far, been successful in coaxing investors back to the market; most notably in the real estate sector.

Following the introduction of the stamp duty land tax (SDLT) holiday, property listing site Rightmove recorded a massive 75% increase in the number of buyer enquiries recorded on their site. And according to Nationwide’s House Price Index for August, house prices experienced their biggest monthly increase in over 16 years.

While undoubtedly a positive sign for the sector, the big question is whether such momentum can be maintained. Property investors need to feel confident enough that COVID-19 has been successfully handled by the Government and that the country can fully recover from the pandemic.

To gauge investors’ sentiments towards the Government’s tackling of the pandemic, FJP Investment recently surveyed over 900 UK-based investors with assets in excess of £10,000; excluding residential property and workplaces pensions. Our research showed that, while the SDLT holiday has proven successful in reassuring some investor’s worries, there is still much more than can be done to help sustain a strong post-COVID economic resurgence for the UK.

Following the introduction of the stamp duty land tax (SDLT) holiday, property listing site Rightmove recorded a massive 75% increase in the number of buyer enquiries recorded on their site.

SDLT holiday a hit

Of the investors FJP Investment surveyed, a quarter (24%) plan on buying one or more properties to take advantage of the SDLT holiday, a figure that rises to 43% for those aged between 18 and 34.

Given that buyers can potentially save up to £15,000 through this tax break, it makes sense that those who may be making their first foray into the housing market would be keen to take advantage of the comparative discounts on offer.

However, a larger proportion of investors––43% of those surveyed––believe that the Government needs to offer further support to homebuyers and property investors beyond the SDLT holiday. Just over half (54%) are in favour of extending the mortgage payment holiday relief scheme beyond 31 October 2020, and 57% believe that more financial relief is needed to support the businesses affect by COVID-19.

It would serve the government well, then, to offer extra assistance to those seeking access to real estate opportunities, be it extending by extending SDLT holiday or providing additional financial relief for those affected by the pandemic.

Long-term worries

Perhaps a more pressing worry, though, is that 54% of UK investors that have lost confidence in Boris Johnson’s government generally based on its handling of the COVID-19 pandemic thus far. Investors will be wary of making any large financial decisions if they do not believe that the pandemic is under control.

Fears surrounding a mishandled second spike may limit the success of the SDLT holiday if the Government isn’t able to inspire confidence amongst homebuyers and property investors. The point is that there is clear demand for residential real estate – the challenge is ensuring buyers are given all the tools and incentives they need to make a fully-fledged return.

The pressure is very much on Boris Johnson and Chancellor Rishi Sunak to assuage these concerns and boost investors’ confidence in the UK. Doing so will ensure that investors’ feel confident in injecting life back into the financial markets; and subsequently triggering a wider recovery of the UK economy. I am happy to say that current signs are indeed promising.

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