Credit, Collections & Insolvency News
The end of furlough coinciding with the finish of the stamp duty holiday could be bad news for the finance sector according to KIS Finance.
The company says that the Coronavirus Job Retention Scheme has been a lifesaver for many businesses in the finance sector, enabling them to retain experienced staff during an incredibly challenging period. With 17% of employers in the sector still relying on the scheme at the end of July 2021, and claims valued at £47millon for the preceding 3 months (ONS), it’s clear that many businesses would have failed without this support. But with the scheme coming to an end on 1st October will the sector see a rise in redundancies as firms struggle to retain their full workforce? Especially when combined with the end of the stamp duty holiday, which some anticipate may slow up the recent increase in activity in the housing and mortgage market.
From 1 st October stamp duty land tax (SDLT) will revert back to its original level in England, after the temporary changes introduced to boost the housing market following first national lockdown. During this period buyers were exempt from stamp duty on properties up to £500,000 in England. Although the potential savings have been tapered out over the last few months, the reintroduction of SDLT on properties over £125,000 in England could result in a slowing up of the housing market, with a potential knock on effect on companies as they decide if they will need to let staff go once the furlough payments cease.
KIS says that this of course may see the sector stimulated by a slight fall in house prices as demand is no longer compressed into a tight window of opportunity, as occurred during the stamp duty holiday. For many the increase in house prices over the last year will have dwarfed the savings available, as the typical UK property increased by around £24,500 between July 2020 and the end of June 2021, far above any savings on SDLT.
If the demand for more space for home working and increased outside space continues, as people reassess their lifestyles as a result of the pandemic, then the housing market may continue to grow, albeit at a steadier rate than over the last year.
Holly Andrews, Managing Director at KIS Finance said “Whilst the end of the furlough scheme may present a challenge to some employers, the outlook still looks positive. Firms may need to reassess their staffing structures to ensure that they are still appropriate to meet the challenges ahead, but without the need to lose experience and skills from the sector.
“Demand looks strong for the future, as with their usual spending habits constrained by the virus many may find they have a bigger savings pot to help them make that next move, especially if house prices now stabilise.”
“As people reassess their lifestyles and financial ambitions for the future, the finance sector needs to be ready to adjust to meet those needs.”