Twenty7Tec Releases Regional Stats: The Great Stamp Duty Holiday Debate

The stamp duty holiday is widely considered to have been a great success for the UK economy. But is that perception the reality?

Leading mortgage technology provider Twenty7Tec – responsible for more than 17m mortgage searches in 2020 by brokers – ran a broker survey this week, asking:

‘Is it right for Rishi Sunak to extend the stamp duty holiday?’

The brokers voted 3:1 in favour of the extension (73.9%).

James Tucker, founder and CEO of Twenty7Tec says:

“Our broker survey showed an overwhelming enthusiasm for a stamp duty holiday extension. There’s been an assumption that everyone is happy to extend the stamp duty holiday. However, whilst it has meant an increased level of demand at many points across the property buying spectrum, it is not universally welcomed.

“Conveyancers have stated this week that many of them are happy to see it end at the end of March as they are, frankly, exhausted and trying to catch up with their commitments. Some solicitors have suggested that an extension should only apply to existing offers – though that feels hard to quantify and monitor.

“Lenders have been balancing their risk for almost a year now and seem to be finally coming round to products offering over 90%LTV – the stamp duty holiday extension will quite likely fuel further demand for these products. At a time when lenders risk appetites are starting to slowly return, could the stamp duty extension delay many lenders from returning more mortgage products in the short term, while they cope with yet further influx and heightened demand?

“As you will see from our findings, the benefits have not been uniform or universally felt. Some regions have fared a lot better than others since the announcement of the stamp duty holiday. But it’s nuanced and the Chancellor may wish to check if it tallies with the Government’s broader ‘levelling up’ north/south agenda.

National effects of the stamp duty holiday

Nationally during the stamp duty holiday (we reviewed 8^th July 2020 to 24^th February 2021 versus the prior period*):

Mortgage searches are up 43.78%;

Residential searches are up 47.93%;

Buy to let searches are up 26.87%;

Purchase documents are up 56.61%

Remortgage documents are down 9.63%;

Remortgage documents are now in the minority again (38% remortgage to 62% purchase) – having been in the majority during the run up to the stamp duty announcement (51.5% to 48.5%). In part this is down to the number of people who will have been on mortgage payment holidays;

Wales

“Wales significantly outperformed the rest of the UK during the stamp duty holiday, despite its various lockdowns. Overall, it saw 48.99% more searches, 54.59% more residential searches and 29.32% more buy to let searches, compared to national figures (excluding Walers) of 43.72%, 47.85% and 26.84%, respectively.

“This also translated into market-beating results when it came to the number of documents prepared by brokers too: up 29.01% overall, up 30.00% for residential and up 25.19% for buy to let documents. This are all significantly ahead of the UK’s averages (excluding Wales) of 22.42%, 22.71% and 21.35%.

“To many, the rural comforts and friendly lifestyle have created massive interest in the Wales property market since the announcement of a stamp duty holiday. So many City workers are asking themselves ‘Why do I live in a central London two-bedroomed flat with sirens blaring past my window at all hours when for the same investment, I could work remotely from a beautiful spot in Wales and own a four-bedroomed detached house?'”

London

“In London, the stamp duty holiday has had a mixed effect. Total mortgages searches in London were up 17.07% but residential was up 23.6% compared to buy to let’s less impressive 3.83%.

However, that falls woefully short of the national figures (excluding London) of a 44.31% overall rise for mortgage searches, 48.32% for residential searches and 27.64% buy to let searches.

“What was even worse was that these mortgage searches didn’t convert into concrete mortgage documents as often as they did elsewhere across the UK. Overall mortgage docs prepared by brokers were down 0.78% in London since the stamp duty announcement and down 1.00% in residential.

“Prior to the SDH, one-third of London’s mortgage searches were for BTL properties, whereas after they were under 30%. In a market where there are fewer 90%+ LTV products to enable first time buyers to get on the market, it’s a real problem for the London property scene that buy to let is also forming a smaller percentage of the market.

“Brexit and other factors will surely have also had an impact on BTL. Brexit, foreign investors, Covid will all have some impact on BTL opportunities and the continued demand for many to live in the Capital.”

Manchester

“Mortgage searches in Manchester during the stamp duty holiday are up 16%. That sounds great until you hear that on average, the UK is up 43.95% excluding Manchester.

“Residential mortgages searches only rose 4.54% whereas buy to let grew 53.26% during the stamp duty holiday.

“What’s worse is that the overall volume of mortgage documents prepared by brokers in relation to Manchester actually dropped by 0.87%. On average in the UK, it went up 22.75%.

“Worse still, the overall volume of residential mortgage documents prepared for Manchester went down by 3.49% over this period. That was offset a little by buy to let documents being up 8.5%.

“Hopefully, it’s only a short-term issue but the additional regional lockdown here really seems to have depressed appetite for a house move to Manchester in a time when lots of people are looking to leave the south to return to the north.”

Liverpool

“Liverpool has seen mortgage searches rise 16.8% over the stamp duty holiday period so far. There’s been more interest in residential in the city since July 8^th, the announcement of the stamp duty holiday, with searches up 21.14% compared to buy to let which is up 5.82%.

“When you exclude Liverpool from the national figures, what emerges is that the city has been left far behind the national growth during this period. Nationally, excluding Liverpool, mortgage searches rose 43.9%.

“Worse news in that the number of formal mortgage documents prepared for Liverpool dropped by 5.6% overall and fell by 7.29% for residential. This demonstrates how the stamp duty holiday benefit has impacted regions and cities unevenly, with Liverpool in particular not benefitting from the Chancellor’s tax cut.

Birmingham

“In Birmingham, we’ve seen almost 25% more mortgage searches since the stamp duty holiday was announced. But that hasn’t translated into more housing transactions taking place. We’ve actually seen a drop of 2.1% of mortgage documents prepared, compared to the rest of the UK’s rise of 22.53%.

“Within Birmingham’s figures, there’s another story hiding: we’ve seen a rise in the number of people looking to purchase in the city (3.1%), but a three times larger drop (-9%) in the number of remortgages.

“The city mustn’t be left behind when it comes to benefitting from the Chancellor’s extended tax break.”

Scotland

“Rishi Sunak’s Stamp Duty Holiday has widely been declared a great success. A closer look tells us that the picture is a little more nuanced.

“First, by the time the announcement was made, the volume of searches for mortgages had already been outstripping pre-lockdown volumes for several weeks. Majority of mortgage intermediaries were already at capacity dealing with an influx of purchase and remortgage enquiries.

“However, the SDH has been a success at sustaining that demand for both searches and ESIS documents prepared for all seven months since. An extension is likely to see the same continue.

“In Scotland, the scheme differs in that the stamp duty relief here wasn’t available on second homes or on any purchases above £250,000. Yet the Scottish mortgage market actually outperformed the rest of the UK for the rise in volume both of mortgages searches and documents prepared. Scottish searches grew by 28.2% more than the rest of the UK. Scottish ESIS documents prepared grew by 6.5% more than the rest of the UK.

“Unless the Chancellor goes further on Wednesday and introduces a tapering of the scheme, all he is doing is moving the cliff edge further down the road. Continuing this elevated level of activity as buyers rush to secure properties and mortgages before yet another deadline.”