The stamp duty land tax holiday for purchases of homes up to £500,000 is due to end on 30 June 2021.
The policy gave countless movers the opportunity to save a significant amount of money when job security was rocked by the pandemic, and helped protect the housing market during turbulent times.
But what will happen when it officially comes to a close? Will it end in one fell swoop? And can home buyers take advantage of the policy at the last minute?
When COVID-19 lurched the UK into lockdown in March 2020, everything looked uncertain, especially for the housing market. Then, the Government hit the brakes and told people to delay their home moves until after restrictions were lifted.
Even when estate agents started reopening in June 2020, many home buyers were hesitant to make the potentially biggest investment of their lives because of job insecurity.
Spiralling house prices threatened the market – one that has a huge knock-on effect on other parts of the economy.
This prompted Chancellor Rishi Sunak to introduce a stamp duty land tax holiday in his summer statement on 8 July last year.
With that, buyers of homes worth up to £500,000 no longer had to pay stamp duty. Previously, movers had to pay on properties costing more than £125,000 and first-time buyers on homes over £300,000. It was, by most measures, a huge success.
The policy was due to end in March 2021 but because of “the sheer volume of transactions” the Government was seeing in late 2020 and early 2021 that wouldn’t be complete in time for the end of March, in the Spring Budget, Sunak pushed the end date to 30 June.
Stamp duty levels will then be tapered back to normal levels by September of this year.
Impact of holiday end
Assessing the impact of any one measure on the ever-moving property market with all its working parts is a bit like trying to predict the future by looking through a crystal ball.
We have to remember too that job security is threatened by the end of the furlough scheme later this year – it’s planned to close in September.
Some banking experts think the end to the stamp duty holiday will cause house prices to drop by as much as 5%, while property advertiser Rightmove thinks that, after an initial drop once the cut is removed, prices will rise by 4% over 2021.
Opinion is split, then, but we can look at the past to see what might happen this month. In February 2021, before the holiday extension had been announced, house prices were actually still rising strongly despite the looming deadline. Could we see the same thing happening in June?
There will most certainly be a rush for new sales before the new deadline, but these run the risk of not being completed in time. There is a huge amount of bureaucracy required to get sales processed and, at present, a huge backlog in the banking, legal and survey sectors.
This could lead to buyers pulling out of deals if they miss the deadline and have not budgeted for the additional stamp duty. Make sure you don’t get caught out.
Is it too late to make use of the stamp duty holiday?
With the deadline fast approaching and the average purchases for first time buyers taking 99 days to complete, and those for existing homeowners taking around 88 days to complete, things unfortunately don’t look good for those who want to jump onto the scheme as it stands now, at the last minute.
Rates won’t revert straight back to what they were a year ago, however. Instead, the holiday will only apply to less valuable purchases between July and September.
Here is a rundown of the figures:
|July 2021 to Sept 2021
|From Oct 2021 (‘normal’ rate)
|Up to £125,000
|Above £1.5 million
So it’s not too late to sidestep paying stamp duty if you are planning on buying a lower value home.
Time is of the essence, though, and with a combined experience of over a hundred years experience in our industry, our trio of financial advisors are perfectly positioned to sift through the hundreds of mortgage packages out there to find the one for you in time, and expedite processing, before the end of September.
Call us on 0208 8192407 or 07961 797978 for a chat. Alternatively, feel free to fill out an online enquiry form here.
Talk to us about stamp duty land tax.