stamp duty holiday
The tapering of the stamp duty holiday has begun; from midnight on 30 June the tax-free threshold dropped from £500,000 to £250,000 where it will remain until 30 September. After that, the nil-rate band returns to its pre-pandemic level of £125,000. So, there are still savings to be made but they are not as considerable. As they were – instead of a maximum stamp duty saving of £15,000, that has reduced to £2,500.

For those who have transactions in progress and who ‘missed’ the deadline. Hopefully they will have a cash buffer in place to ensure the purchase can proceed. If not, the transaction could collapse, potentially impacting everyone involved in that particular property chain.

The stamp duty holiday, introduced last July as the country came out of the first lockdown. Has provided significant stimulus to the housing market. Research from Rightmove reveals that 1.3 million buyers have benefitted from the relief. But soaring demand for more space, both inside and out. As a result of living with lockdown, combined with rock-bottom mortgage rates. Have also helped pushed up property prices to new highs. Nationwide reports that house price growth rose to 13.5 per cent in June. The highest level since November 2004, resulting in a £16,000 rise in the asking price of a home. Since July last year across the country and £8,400 in London.

The question is whether without the stamp duty holiday the market will fall off a cliff. Market commentators don’t think this will happen and that while the stamp duty concession has stimulated the market. Other forces at work have helped create such high levels of demand. Rightmove found that only 4 per cent of buyers in England would ditch plans to buy. If they could not take advantage of the stamp duty holiday. A further 25 per cent said they would try to renegotiate with the seller on the price. Another 13 per cent said they would try to buy a cheaper home.

What we might not see is the rapid growth we have had, which is not necessarily a bad thing. But we are unlikely to see a crash either. Halifax reports that the average UK house price slipped by 0.5 per cent in June, the first monthly fall since January, although it also notes that average prices are still more than £21,000 higher than the same time last year. The lender added that the lack of stock and more buyers than properties for sale will ‘sustain high average prices for some time to come’. However, Halifax also pointed out that ‘we still expect annual growth to have slowed somewhat more by the end of the year, with unemployment expected to edge higher as job support measures unwind, and the peak of buyer demand now likely to have passed’.

If property price growth does moderate, this is good news for home buyers, particularly first-time buyers. Post-pandemic, people still want more space and with working environments changing so they don’t have to be in the office every day, they can feasibly live further out from city and town center’s. And with only first-time buyers benefiting from stamp duty relief on properties costing less than £300,000 from 1 October, there will be less competition from buy-to-let investors or those with a second home.