The stamp duty holiday deadline for properties valued at £500,000 or below has now ended. In this article we will look at just how much the discount when purchasing a property has impacted the housing market and what to expect going forward.
The temporary stamp duty holiday was introduced on 8 July 2020 in England and Northern Ireland, which means that homebuyers paid no stamp duty on homes priced at £500,000 or below for almost a year, with some saving up to £15,000. From 1 July to 30 September, the nil-rate threshold moves to £250,000. This provides a staggered return to previous stamp duty dates, which will come back into effect on 1 October.
Not surprisingly, for most of this year there has been a home buying frenzy across the UK and with a lack of new supply prices have been rising. Rightmove estimated in June that more than 700,000 homes were going through the sales process, the highest level in a decade.
More than half a million homebuyers in England are expected to benefit from the stamp duty holiday before it officially ends on 30 September, which equates to savings of £3.4bn, according to research by GetAgent.co.uk. Looking at data from Land Registry, the estate agent comparison site estimated that 539,972 transactions completed between 8 July 2020 and 30 June 2021. Of these, 84% of transactions will have no stamp duty due, providing savings of £3.2bn.
The firm also estimates that an additional 138,764 house sales will complete between the tapering period when the stamp duty free threshold drops to £250,000. Colby Short, founder and CEO at GetAgent.co.uk, says of the stamp duty holiday: “There’s no doubt that it’s been a factor in creating the current market bottleneck that has seen many subjected to long delays during the transaction process. However, there’s also no doubt that a number of homebuyers benefitted and many more will continue to do so right up until the end of September. Even with the reduction of the stamp duty free threshold from July onwards, nearly half of all transactions will continue to pay no stamp duty at all, so we can expect the market madness to continue until this secondary deadline, at the very least.”
There are already signs that the property market is starting to cool down. However, a return to normality will still take some time, according to Rightmove. Tim Bannister, Rightmove’s director of property data, says: “Some of that demand has now been met, and the phasing out of stamp duty reliefs has also taken away some of the urgency to move, though our high traffic and search data indicate that there is still strong buyer demand.
