How Will the Stamp Duty Holiday Impact the Construction Industry in the UK?
Following the announcement of Chancellor Rishi Sunak, the stamp duty threshold is due to be raised from £300,000 to £500,0000, meaning many will be able to purchase a property without paying this controversial tax up until March 2021.
The impact of such a decision has already been felt across the UK as homebuyers leap into action and, of course, related industries such as construction are beginning to feel the pressure.
What is Stamp Duty?
Stamp duty land tax (SDLT) is a lump-sum tax that is applied to property or land in the UK. The thresholds vary depending on your location, but up until recently has generally applied to all property over £125,000 or £300,000 for first time buyers.
Stamp Duty has become a controversial tax, and one of the most discussed in the UK. At one time it applied to the majority of printed publications along with some clothing items, insurance policies and other consumables.
Clearly, the above is no longer the case. In fact, aside from a few historical remainders, the now named Stamp Duty Land Tax (SDLT) has only really clung on to property.
Following its name change in the 1950s, stamp duty was low, with buyers paying nothing until a house price reached £30,000. Remember an average house would only have cost £20,000 back then, so most paid no stamp duty at all.
It would be safe to say that things have changed somewhat since then, following a series of increases throughout the years, Stamp Duty during 2019 brought a total of over 135 billion British pounds in revenue to the HMRC!
What is changing?
As of the 8th July 2020, homebuyers in the UK will no longer need to pay stamp duty on the first £500,000 of a property’s purchase price, meaning if it is your only property and the sale price is below £500,000 there will be nothing to pay until 31 March 2021. This temporary measure has been taken to help recover the economy following the impact of Covid-19.
So how does this impact the construction industry?
It is clear there has certainly been a rapid uplift in the demand for homes, with the announcement pushing many to move forward with property sales and purchases before the window closes.
Norfolk estate agency Pymm and Co, echo this finding with Kris Pearce, Norwich branch manager telling us;
“These past few weeks have been amongst our busiest ever. The announcement of the Stamp Duty changes until March 2021, has and will continue to provide a massive increase in those people looking to buy new properties, as they will benefit from potentially saving thousands of pounds. It’s win-win for both seller and purchaser.”
The impact from the increase in demand is already being felt throughout newly reopened construction sites across the country. According to a recent article in the Guardian UK, building firms, particularly Housebuilders, expanded activity in June at the fastest pace in more than two years as news of the Stamp Duty Holiday was announced.
The PMI construction survey found that “46% of firms reported an increase in business compared with 27% that experienced a reduction.”
The real question is whether we as an industry have the resources to meet demand. It is certainly going to test project managers and their teams to the hilt if demand continues to progress this way.
Managing construction site demand
If your construction site is a hive of activity right now, the rise in demand will of course also lead to an increase of people on site, not only those working to get houses built but those delivering materials too. It is also bound to have an impact on industries that are both directly and indirectly linked to the increase of demand for houses, such as DIY materials, tradespeople and furniture suppliers.
Rico Wojtulewicz, head of housing and planning at the House Builders Association (HBA), said:
“Housebuilders will directly benefit from this decision but so will their supply chain; from solicitors, surveyors and estate agents, to kitchen fitters, plumbers and curtain makers.
Hundreds of occupations will win more work because of the stamp duty holiday and while on the surface it may seem like an unequal giveaway, the wider benefit to our industry will be huge.”
We as a business have noticed a huge demand for our product, which of course is vital to any well running construction site. Rest assured, we have put measures in place to meet demand as we go forward. Afterall, we can’t have you going without, well… going.
At times like this, if you are managing a construction site, you will be all too aware of the importance of investing in the right equipment to help everything run smoothly, so why not let us take one thing from your plate.
Our team offer quality, regularly maintained portable toilets which are delivered hassle free throughout South, East and Central England. Thanks to our large range of stock and multiple depots, when the pressure is on due to increased demand, we deliver chemical toilets fast! Call us on 0800 606 100 to arrange your site toilet hire today.