How will the end of the Stamp Duty Holiday affect the housing market?

The Stamp Duty Holiday – which the Government unveiled last year to help stimulate the housing market in response to the COVID-19 pandemic – is due to come to an end soon. Buyers have until 31 March to complete their deal and benefit from a temporary Stamp Duty Land Tax relief.

When the Stamp Duty Holiday was announced last year, we received a significant influx of new enquiries for property valuations and home surveys, as buyers flocked to take advantage of the tax break. Even during the past couple of months, we have continued to receive calls from clients needing our services to help them complete their purchases before the deadline expires.

With rumours swirling that the Stamp Duty Holiday deadline could be pushed back until the summer, we take a closer look at what might happen to the housing market when the break finally does come to an end.

What is the Stamp Duty Holiday?

Last Summer, Chancellor Rishi Sunak announced a Stamp Duty Holiday on all homes worth under £500,000. It was designed to kickstart the housing market that had stalled because of the coronavirus pandemic. The Stamp Duty Holiday came in the form of a temporary increase to the tax threshold.

Buyers typically pay Stamp Duty of two per cent on properties worth between £125,001 and £250,000, and five per cent on those worth between £250,001 and £925,000. However, under the Stamp Duty Holiday rules, the starting threshold for all sales between 8 July 2020 and 31 March 2021 increased to £500,000. It is estimated that the move has helped nine in ten homebuyers, saving them an average of £4,500 on their purchase.

There are two main benefits to the Stamp Duty holiday, which help most buyers. Firstly, it enables buyers to look at more expensive properties without having to find the money to pay Stamp Duty. Secondly, it can make it easier for people to get a mortgage and save a bigger deposit because any of the cash they may have previously needed to set aside to cover Stamp Duty could be put towards their deposit instead. The Stamp Duty Holiday was initially due to expire on 31 March 2021, but recent media reports have stated that the Chancellor may push the deadline back to the end of June, when he unveils his 2021 Budget next week.

How will the end of the Stamp Duty Holiday affect the housing market?

It remains to be seen whether the Chancellor will extend the Stamp Duty Holiday, and all eyes will be on this year’s Budget for any updates. However, it’s fair to assume that should it come to an end on the original deadline, it will cause further disruption to the market and will probably leave some buyers disappointed if their transactions don’t complete before the cut-off date.

The industry has done an excellent job of coming together to manage buyers’ expectations as the deadline draws near, with legal firms, estate agents, mortgage providers and surveyors working harder than usual to help their clients push their purchases through before 31 March. There are an estimated 628,000 home sales still currently in the legal process across the UK. This includes those that were agreed in 2020 and those that have been approved so far this year.
With such a vast number of property sales going through the system currently and pressure increasing on everything from valuations and mortgages to legal services, delays are inevitable.

Even if the Stamp Duty Holiday is extended until the summer, it won’t do much to ease this pressure ahead of the current deadline and will introduce more new buyers into the system to beat the new cut-off. Our advice to buyers would be that should the Stamp Duty Holiday deadline be extended, you will need to act quickly to take advantage. That means getting all your ducks in a row as soon as possible.

A home survey or valuation is a vital part of the buyer’s journey and can help you decide whether to buy the property you are interested in and at what price. We’ve been working closely with clients throughout the pandemic to help service their needs quickly and complete their reports or valuations so as not to hold up the process. With a potential spike in interest anticipated should the Stamp Duty Holiday deadline be pushed back, we would urge all buyers who need a survey or valuation to book one in as quickly as possible to avoid disappointment.

Let us help

At GB Home Surveys, we offer a different approach to getting a home survey. Our service is quick, convenient and hassle-free. It will provide you with all the information you need to make the right choices.  We’re an independent, RICS regulated chartered surveyors and have been providing trusted services for almost 30 years. Our surveyors are all RICS members and RICS registered valuers. They have vast local expertise and knowledge, so you can be sure you’re getting the best advice to help you buy with confidence. For a free initial consultation and a no-obligation quote, give our friendly team a call today to discuss your requirements.

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