- About 520,000 house sales in the UK could be lost in 2020 after last month’s government freezing of the sector
- The consultancy is proposing a stamp-duty tax holiday after the lockdown to help revive the industry.
- Rightmove, one of the UK’s largest property websites has also recorded a 40% drop in house listings.
Research by property consultancy firm Knight Frank shows that about 520,000 house sales are set to be lost this year in the UK, following a government directive that froze the housing market after the Coronavirus outbreak.
According to the real estate firm, the 38% drop in house sales during the year is set to have a ripple effect across the sector, hitting retailers and even government coffers.
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If the social distancing directive by government stays in place throughout next month and gradually lifted in June, the result would be 350,000 fewer mortgage approvals in Wales and England, and 150,000 fewer mortgages for first-time homeowners, Knight Frank indicated in its report.
Additionally, Removals firms are projected to lose about £395m in revenue while DIY and renovation costs for homeowners is expected to drop by about £7.9bn. The Treasury will also have to contend with a loss of about £1.6bn resulting from missed VAT, on top of other personal and business tax revenues, Knight Frank stated.
Proposed tax holiday
While the government is putting in place a raft of measures to cushion businesses against the impact of the current economic crisis, Knight Frank is proposing a stamp-duty tax holiday as part of the efforts to jump-start the real estate sector once the lockdown is lifted. The consultancy further stated that those measures should help ease planning rules and extend the help-to-buy program.
“Moving house has a clear multiplier effect for the economy. Different-sized businesses in all areas of the economy feel these benefits, which is something the government will take into account when drawing up its post-lockdown stimulus plan,” Knight Frank’s head of London residential research Tom Bill said.
Rightmove (LON: RMV), a property website reported it had already recorded a 40% drop in the number of house listings since March when the government brought to a halt the housing market operation including home viewing and moving.
Figures by Rightmove suggest that while potential buyers and renters are still allowed to deal with agents, many have decided to put plans on hold until lockdown measures are lifted. The site which covers more than 95% of the UK property market said its platform recorded about 65,531 new listings during the lockdown period between 8 March and 11 April. Compared to the same period last year where listings stood at 112,570, Rightmove described the drop as an “abrupt turnaround from the best start to a year since 2016.”