On 3 March, Chancellor Rishi Sunak announced that the existing Stamp Duty Holiday would be extended by an additional three months.
The first break was introduced back in March 2020 as a measure to encourage growth in the housing market during the COVID-19 pandemic. It provides for the suspension of property tax on the first GBP 500,000 of all sales of property in the United Kingdom. This means there are big savings for those to be had that purchase during this time.
The break was supposed to end in March, but as the date drew closer, industry stakeholders and citizens petitioned the government to extend it. At first, the government said they would not but they eventually gave in to pressure and extended the expiry date, providing additional support for the market.
Not only have they decided to extend the holiday until June, but between June and the end of September, stamp duty will not be payable on the first GBP 250,000 of a property’s price. Sunak said this was introduced as a way to “smooth the transition” back to the regular rate of the first GBP 125,000 being tax-free.
Sadly, property buyers in Scotland and Wales will not benefit from an extension. Their break ends on 31 March with no transition.
What impact did it have?
The Stamp Duty Holiday drove forward a surge in property sales and even just those browsing their options online. Various property search engines noted significant increases in traffic to their sites, as well as inquiries on properties.
According to Bloomberg, the number of people looking for a mortgage also increased. The UK recorded a 13-year-high in approvals in November 2020, as the sector boomed despite the ongoing economic challenges in the country. This boom was put down to the tax breaks as more buyers were incensed to make savings on their dream home.
In the midst of the pandemic, tools that allow people to calculate their mortgage, like this from Trussle were also likely to be popular. Removing the need for face-to-face meetings with brokers or mortgage providers, they allow much of the legwork to be done online. By inputting information into the calculator related to deposit, income, and term of the mortgage, users can get an idea of what’s on offer from leading providers. Tools such as this, combined with property search engines, helped support the growth of the property sector during this time.
What will the next few months look like?
Estate agents are preparing for a bumper few months as buyers race to get a last-minute purchase, or close before the June deadline. They also expect the months between June and the end of September to be busy as well as another round of buyers rush to take advantage of the ‘phasing out’ process. In the autumn, however, the market will likely slow down. Typically a slower time of year for sales, this will probably be exacerbated by the return of the tax to its regular limits.
If you are a seller, now is a great time to put your property on the market. Prices are strong, demand is high, and you can hope to benefit from buyers looking for a quick and uncomplicated sale. For buyers, there has never been a better time to buy as you have a unique opportunity to save thousands, thus increasing your overall budget, or being able to put some aside for renovations and decoration.