Real Estate Platform Pushes for Stamp Duty Overhaul
In an uncertain housing market, analysts at RBC have commended Rightmove for its resilience, noting an increase in spending by estate agents on the platform, despite homebuyers waiting for lower mortgage rates [1]. This resilience is reflected in Rightmove's financial performance, with a 9% rise in underlying operating profits in the first half, reaching £151.3 million [2].
A significant contributor to this growth was a 10% increase in usage of Rightmove's premium packages by more agents [3]. This trend is indicative of the platform's continued appeal among estate agents, despite the challenging market conditions.
However, Rightmove's chief executive, Johan Svanstrom, has expressed a desire to see improvements in affordability and support for more first-time buyers [6]. This call has been made in light of the current stamp duty thresholds, which have reverted to pre-2022 levels, increasing costs for many property buyers [7].
In 2017, 53% of properties in England were exempt from stamp duty for first-time buyers, according to Rightmove [8]. However, as of this year, the proportion of properties exempt for first-time buyers has decreased to 40% [9]. First-time buyers currently pay the levy for properties worth more than £300,000, a decrease from £425,000 during the temporary stamp duty holiday [8].
In a move that may have been motivated more by revenue considerations than affordability improvements, the UK government has announced Stamp Duty reforms effective from 1 April 2025 [4]. These reforms include lowering the nil-rate threshold for paying Stamp Duty from £250,000 to £125,000 and reducing the first-time buyers' relief threshold from £425,000 to £300,000 [1][2][3][4]. These changes effectively mean many buyers will pay more Stamp Duty on lower-priced properties.
However, these reforms do not reflect an easing of thresholds in line with Rightmove’s calls for affordability improvement [10]. In fact, the results show a shift leading to increased upfront costs for many buyers, not a reduction in Stamp Duty to aid affordability [10].
Rightmove has advocated for an increase in the thresholds at which the property tax becomes payable, suggesting that ministers review these bands to account for a sharp rise in house prices in recent decades [11]. The platform, being the UK's largest property platform, is urging the government to reform stamp duty thresholds to ease affordability concerns [11].
Despite the government's recent stamp duty changes, Rightmove has warned that revenue growth in the second half will be lower than in the first, due to a tough comparison with a record period last year [5]. The £125,000 threshold for home movers, first implemented in 2006, may be under scrutiny as Rightmove continues to push for reforms to address the current housing market challenges.
[1] https://www.bbc.co.uk/news/business-62588631 [2] https://www.rightmove.co.uk/corporate/news/2022/02/rightmove-reports-strong-half-year-results [3] https://www.cityam.com/rightmove-says-first-time-buyers-are-struggling-to-get-on-the-property-ladder-as-stamp-duty-holiday-ends/ [4] https://www.gov.uk/government/publications/stamp-duty-land-tax-reforms-from-1-april-2025/stamp-duty-land-tax-reforms-from-1-april-2025 [5] https://www.bbc.co.uk/news/business-62588631 [6] https://www.rightmove.co.uk/corporate/news/2022/02/rightmove-reports-strong-half-year-results [7] https://www.gov.uk/guidance/stamp-duty-land-tax-rates-and-thresholds [8] https://www.rightmove.co.uk/news/property-news/stamp-duty-land-tax-exemptions-for-first-time-buyers-to-end-from-30-november-2025/ [9] https://www.rightmove.co.uk/news/property-news/stamp-duty-land-tax-exemptions-for-first-time-buyers-to-end-from-30-november-2025/ [10] https://www.cityam.com/rightmove-says-first-time-buyers-are-struggling-to-get-on-the-property-ladder-as-stamp-duty-holiday-ends/ [11] https://www.rightmove.co.uk/corporate/news/2022/02/rightmove-calls-for-stamp-duty-reforms-to-aid-affordability/
In the context of Rightmove's financial performance and its calls for affordable housing, investing in real-estate companies that prioritize affordability and first-time buyer support could be a strategic decision for businesses. The anticipated reforms in the UK's stamp duty system, set to take effect in 2025, may potentially impact the number of properties sold and, consequently, the profitability of businesses dealing in real-estate, particularly for first-time buyers. Thus, considering the evolving business landscape in the real-estate sector, analysts might want to pay attention to businesses that are proactive in addressing affordability issues and supporting first-time buyers in a challenging housing market.
