Ross Counsell, chartered surveyor and director at property buyers, GoodMove, shares his thoughts on the stamp duty holiday, how it’s contributed to higher property prices and predictions for the year ahead.
June 30th marks the end of the stamp duty holiday at the current £500,000 threshold, with it set to stagger back to the normal rates before the final deadline at the end of September. But what will the end of the stamp duty holiday mean for the property market, and when is the best time to buy a property in 2021?
When does the stamp duty holiday end?
After much anticipation, the stamp duty holiday in its current format will come to an end on June 30th. Following this, there will be a staggered reduction from the original threshold of £500,00 to £250,00 until the 30th of September. On October 1st, it will return to the previous level of £125,000.
The stamp duty holiday has been a catalyst to the massive boom in the property market and increase of house prices, with more people rushing to buy a property while the holiday restrictions are in place.
Has the stamp duty holiday contributed to higher property prices this past year?
With such high demand for property fuelled by the stamp duty holiday deadline, comes higher average property prices. According to ONS's latest statistics, UK average house prices have increased by 8.9% over the year to May 2021 and now stand at a mammoth £265,000 – the highest seen in the UK in many years.
The stamp duty holiday, as well as demand for more spacious properties fuelled by lockdown, has helped the property market succeed through what has been an immensely difficult year in other industries.
How many people have used the stamp duty deadline?
Coupled with the recent First Homes scheme, the stamp duty holiday has given many first-time buyers the possibility of getting a foot on the property ladder.
We carried out a poll which found that on average, nearly two in five (39%) Brits have taken advantage of the stamp duty holiday when buying their home in the past year. For that lucky percentage, they are expected to have made significant savings of up to £15,000.
What does the stamp duty holiday extension mean for the housing market in 2021?
As we have seen from HPI statistics across the year, the housing market has become extremely saturated, following people rushing to buy properties to meet the deadline. Mortgage approvals and new buyer enquiries for properties have risen by 44%, with the rise in demand reflecting the inflation of house prices.
In a sense, the government’s exclusion of contract exchange with stamp duty may be of benefit in the long run. We can expect to see a decline in demand from October once the deadline officially ends, and expect this to be a better time to buy a property this year before rushing to try and meet the deadline.
Should buyers wait to purchase property until the end of the new deadline?
For anyone looking to purchase a property, the advice is simple – hang fire. If the statistics are reflective of anything over the past year, the stamp duty is of benefit to only one side of the coin – the sellers. If buyers can wait it out until the end of the deadline, they should expect to save a significant amount of money on a property.
A home is the heart of you and your family, and with only three months to go until the end of the stamp duty deadline, it’s worth buyers taking their time to find their dream property. Such a significant stage of life should not be rushed, as this can cause dissatisfaction in the long term.
So, in the meantime, do your research and really get to grips with the property market. Before looking to buy, research the area and any streets you’d be interested in living on, so you don’t need to spend time later. Look at listings every day and know exactly what it is you are looking for in a property so when the stamp duty ends, you can jump on it straight away. Further, make sure you have a mortgage-in-principle ready to go which will speed up the process once you decide to put in an offer.
Buying a home amidst the competitiveness of the property market can be disheartening for buyers, but it’s important to stay positive and be patient!
*Ross Counsell is the chartered surveyor and director at property buyers, GoodMove.