UK homebuilders benefiting from reports stamp duty holiday to be extended

Companies in the UK housing sector are rising on Monday, benefitting from reports that the UK Chancellor Rishi Sunak is considering extending the stamp duty holiday. Under the current plan, homebuyers are granted an exemption from paying stamp duty on properties up to £500,000 until March 31st. Anyone completing a purchase before this deadline will not pay any stamp duty, effectively saving buyers up to £15,000.

The government announced the policy in July to help buyers impacted financially by coronavirus and keep the housing market ticking over. However, with signs that the end of the policy is having an impact on property completions, there is now suggestion that Chancellor will look to extend it. The limited extension – touted at just six weeks – would help potential buyers from “falling off a cliff edge”. However, an extension of just six weeks would surely just kick the can down the road and the same issues would rear their head ahead of the new deadline.

Homebuilders
UK listed homebuilders have rallied on the news of a potential extension. At 11:50, FTSE 100 listed Barratt Developments (LON:BDEV) and Taylor Wimpey (LON:TW) are both trading higher by over 3%. Berkeley Group Holdings PLC (LON:BKGH) shares trade higher by over 2%. Other smaller homebuilders are also higher with Redrow (LON:RDW) and Crest Nicholson (LON:CRST) trading higher in the FTSE 250. Rightmove PLC (LON:RMV), the search site for homes for sale and to rent, is also gaining ground following the news.

Data
Overnight, Rightmove also released their monthly property price data. The company said asking prices unexpectedly rose in January and early February despite buyers probably being too late to benefit from the current stamp duty holiday. Obviously, if the holiday period is extended then homebuyers would still manage to avoid having to pay stamp duty.

The data showed average prices of property coming to market increased by 0.5%, however, the number of new houses coming to market was down 21%.

“As well as the current lockdown motivating buyer demand again, the restrictions have also been a factor in limiting new supply,” said Rightmove Director of Property Data Tim bannister. “These are strong signs that new buyer demand is not facing a cliff-edge after March 31.”

One will now have to wonder whether the latest data will be enough to sway the Chancellor’s decision when he announces the budget next month.