Doncaster property expert reveals impact of stamp duty holiday on housing market – and whether buyers can still make the big tax saving now
The stamp duty holiday has been one of the most high-profile economic interventions the Government has made since the coronavirus pandemic hit the UK.
Last July the Chancellor Rishi Sunak raised the threshold at which property buyers must start paying the tax from £125,000 to £500,000 in England and Northern Ireland, in a bid to stimulate the housing market which came to a halt during the first national lockdown.
It meant savings of up to £15,000 were possible – but property transactions must be completed by March 31, 2021, in order to avoid a bill.
Estate agent Redbrik, which markets homes in Doncaster, has seen an increase in demand, with its website traffic and enquiries up by 34 per cent and 44 per cent respectively year-on-year.
David Cooper, a director at the firm, explains the impact of the stamp duty holiday below – and reveals whether buyers can still make the deadline in time.
What effect did the tax holiday have?
“It kickstarted the market, and gave it an additional boost. Going back in time 12 months, in March, April and part of May we were in a national lockdown and nobody knew what kind of market – or even what kind of world – we were going to come back to. The housing market had remained fairly resilient, we hadn't had too many buyers pulling out because they were pessimistic, and it's fair to say we were pleasantly surprised. This was underpinned by a number of things, including the desire to move house – people were looking for homes with an office, an extra bedroom and a nice garden. We've got record low interest rates, banks still wanting to lend money, the Government furlough scheme – all those conditions create a strong housing market, especially when you've also got low supply. Added into the mix you've got the stamp duty holiday which is not something we were expecting. That gave what was already a pretty hot market an extra boost with people wanting to take advantage of what can be a fairly sizeable saving – up to £500,000 is £15,000. That added more fuel to the fire, it's fair to say.”
Have people told you they're buying and selling purely because of the stamp duty holiday?
“Absolutely they have, it's added some additional properties, and buyers and sellers, to the market that probably wouldn't have been there, so it's certainly been beneficial. Supply is at historically low levels, and has been for a number of years. We were speaking to buyers towards the end of last year and a lot of people were rushing to get an offer accepted. What I would say about the stamp duty holiday, and the potential of considering whether it's a regressive tax in the first place, is there are wider positive knock-on effects for the economy just from people moving house. Solicitors, removal companies, tradespeople and home improvement firms are busy. There's a conversation there as well.”
What is likely to happen if the tax holiday doesn't get extended?
“At the moment it is due to end at the end of March. We are planning that that will be the case. The Chancellor is due to make a budget announcement at the beginning of March. The majority of buyers and sellers we have have probably gone into most transactions with their eyes open. People towards the end of last year who were having offers accepted on properties were probably being forewarned by their solicitors there was no guarantee they were going to be able to get it through by the end of March. That's not to say they definitely couldn't, but like anything in life there are no guarantees. We're not expecting a massive number of deals falling through. The people we're dealing with are well-informed about what may happen.”
Do you think the stamp duty holiday should be extended?
"We're in favour of it being phased out in some way. For example, if you could prove you had a sale agreed or offer accepted on a house before the end of last year, the stamp duty holiday is honoured whenever you complete, or if you've exchanged contracts so the transaction is legally binding before the end of March. Something along those lines would help a few people out. I'm not sure quite how much value there is necessarily in extending it. Every time you extend a holiday you're always, at some point, going to end up with this cliff edge moment when it's either on or off.”
Is getting the discount now unachievable?
“No, it's not. There is no set time frame that a house sale can go through in. We've had sales go through in four weeks from someone having their offer accepted to moving in, to taking up to six months. There are so many different things that can affect how long it takes. The advice of the solicitor is absolutely crucial, as are the circumstances of the buyer. If you're in a cash position and don't need to borrow money, or you're buying a house on a road you've bought on before, all these things cut the time down. We've sold some houses in the last couple of weeks where solicitors have assured them that - as long the other side is co-operative - they can get it through before the end of March. But you certainly wouldn't want to stick your neck out and promise it, because anything can happen.”