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A ‘stamp duty holiday’ may be needed to help the housing market bounce back in a post coronavirus world, the Royal Institution of Chartered Surveyors has suggested.
Unsurprisingly, the latest RICS survey of estate agent members painted a pessimistic picture. With estate agents in lockdown, house buyer demand was, of course, massively down. The letting market also suffered with tenant demand ‘flatlined’ across the UK and while short term rent expectations ‘slipped into negative territory for the first time since the financial crash’.
More unexpected was agents’ dismal assessment of the longer term. Four in ten said they expected house sales to fall further after the crisis was over.
‘The fact that responses are negative not just at the three but also the twelve month time horizon is significant in suggesting that the legacy of covid-19 could be such that any return to what might be described as “normality” in the economy will take time and households will remain cautious for a while’, said RICS chief economist Simon Rubinsohn.
“Of course, the primary focus of government is at this stage is the health of the nation and defeating coronavirus and it may be a little premature to be planning for the economic recovery. However, the feedback from the survey does imply that further government interventions both in the wider economy and more specifically in the housing market may be necessary to aid this process supporting businesses and people back into work’.
RICS head of government relations Hew Edgar, said ‘the Government will need to consider all avenues that could feasibly rebuild confidence, bridging the gap between uncertainty and recovery.
‘RICS is not an organisation that would call for a stamp duty holiday on a whim, and indeed our view prior to Covid 19 was that it required a full-scale review. As we start to emerge from this crisis, however, it is likely that the finances of potential homebuyers will be under strain, and the burden of stamp duty could put buyers off. For those who can afford to move they may lack confidence in the market, adding to the slow down.
‘A stamp duty holiday could be one of the ways to reactivate the housing market quickly as a short-term measure’.