The full Stamp Duty Holiday came to an end on 30 June 2021, meaning that from July 2021, buyers must now pay stamp duty on property purchases over £250,000; albeit at a reduced rate. Whilst this may have left some feeling like they missed out, the end of the stamp duty holiday has some surprising benefits for those looking to move.
From 1 July until 30 September 2021, there will be a reduced rate for stamp duty. This means that there is no stamp duty on buying a home for properties up to £250,000.
If you are thinking of buying a home in London, read on to find out what the end of stamp duty could mean for you.
The Stamp Duty Holiday
A tax break when buying a new home was introduced in July 2020. Initially, it was to run until 30 March 2021, when all of us had hoped the pandemic would be almost over. The holiday on stamp duty meant that you didn’t have to pay tax on any property purchase of up to £500,000.
Most analysts say that the stamp duty holiday helped support the UK economy, boost recovery and bolster the property market. Then in the spring budget, Chancellor Rishi Sunak announced that the house-buying incentive scheme would extend for a further six months.
Giving buyers a tax break seemed like a positive move. According to some reports, 1.3 million buyers benefited from the stamp duty holiday. However, it had another effect on the property market—house prices shot up by an average of £16,000. In addition, due to the extension of the stamp duty holiday, many sellers are holding off selling, impacting supply.
The End of Stamp Duty — Benefits to Home Movers
The most significant benefit as stamp duty winds down is that it signals a return to normality. The property market craves stability. So, the demise of stamp duty should see a rebalance in the growth of property prices in the UK. This positive trend should mean that more properties will enter the market, and the market should cool down as a result.
One of the most significant benefits of the stamp duty phase-out is for first-time buyers. Of course, first-time buyers are exempt from stamp duty on homes up to £300,000. But, during the pandemic, they had a significant disadvantage compared to movers. Because house prices soared, many first-time buyers found it challenging to make the deposit. Now, there will be less competition from homeowners who want to move or from buy-to-let investors.
Healthy conditions in the property market also mean that now is the right time to buy a home. For example, it seems unlikely that the Bank of England will raise interest rates soon. In addition, more properties are coming back onto the market. So while house prices may not significantly fall any time soon, there is more choice—especially for first-time buyers.
Other positive indicators in the housing market also benefit buyers. For example, unemployment is lower than predicted, and people have more personal savings than before the pandemic. Also, some developers are extending the stamp duty holiday—some until the end of the year—by paying the stamp duty on new builds.
Buying Property in London
If you’re looking to buy a property in London, the RIB residential sales team can help. Our expert team can help you find your ideal home in some of London’s prime locations. We cover Fitzrovia, Soho, Marylebone, Covent Garden, Bloomsbury and more. Contact David Calderia on the contact details below or browse our available properties online.