What You Should Know About The Property Market As Stamp Duty Holiday Comes To An End

Last month we brought to your attention the extension of stamp duty holiday as part of Chancellor Rishi Sunak’s measures to recover from the impact of the second lockdown.

Last year the stamp duty holiday was introduced in July to give the housing market a boost after the first national lockdown. Indeed it led to more and more people reconsidering the kind of property they wanted to own and what it was extremely necessary to have in a dream home after so many months confined in ours homes. People started noticing even the tiniest things about their homes, things that normally wouldn’t bother them but with so many months inside became deal breakers. That’s when the stamp duty holiday came to the rescue. Indeed by introducing the stamp duty holiday Sunak raised the threshold at which buyers start paying stamp duty with immediate effect, going from £ 125,000 to £ 500,000 in England and Northern Ireland. This move attracted both first time buyers and already house owners that started reconsidering the kind of house they envisioned themselves in as their forever home.

However this sudden interest in the property market, as mentioned before, also led to a slower home buying process and soaring prices, leaving people unable to complete the desired transaction in little time.  This is particularly worrying now that the stamp duty holiday deadline is approaching, as most people could be finding themselves unable to get the house of their dreams.

As a matter of fact, real estate agents in the UK were already voicing their concerns about the speed of the transaction taking too long, leaving both sellers and buyers not capable to go ahead with their plans.

This is why the online petition we mentioned was created. Homebuyers, real estate agents, sellers and lenders and many more all got together to create an online petition with the goal to have the stamp duty holiday triggered upon exchange of contracts and not completion, forming a legal bound as soon as the contract was stipulated. Were it not the case buyers and sellers would be stuck waiting to reach.

So what happened to this petition?

It was signed by 12,615 people, far from the 100,000 signatures goal that they had in mind. The government is supposed to give a response to all petition that get more than 10,000 signatures. At the moment there is still no response from the government. Next, the petition would be considered for debate in Parliament were it to reach 100,000 signatures.

Christopher Holland was the surveyor who initiated the petition in early spring to highlight the fact that most buyers were missing out on the tax break because of the rapidly-rising prices.
As we mentioned before the main concerns are all around the rising prices, the speed of transactions and the lack of control.

Moreover there is something else that has come to light in recent weeks: the lack of supply.

With only one month to complete the deals, both real estate agents and potential home buyers are left with a bittersweet reality: the incredible spike in demand led to a shortage of supply of new listings.

This situation is leading to frustration and anger, especially among first time buyers.

David Westgate, CEO of Andrews Property Group, released the following statement addressing the situation:  “We can’t take on new instructions fast enough to meet the demand at the moment, and the lack of new stock, particularly houses with outside space, is frustrating highly motivated buyers”.

However homeowners interested in selling would benefit greatly from this last month of house hunting frenzy, as Westgate puts it:  “For any homeowners serious about selling, this is the perfect time to be marketing your property, but these favourable conditions won’t last forever, so this isn’t the time for a wait-and-see approach.”

What can we expect when stamp duty holiday ends? 

After June 30 a tapering period will be introduced. This would mean that the starting threshold of stamp duty would be set at £ 250,000 until the end of September and then return to £ 125,000.

What does it mean for homebuyers?

Homebuyers will have to complete the deal before the end of stamp duty holiday or they won’t be exempt from paying stamp duty holiday. If you exceed the stamp duty holiday deadline you will have to pay stamp duty on properties costing £ 250,000 or more.

For this reason we believe that even though the demand is higher than ever and supply doesn’t seem to match the ever growing demand, people who are really serious about selling or buying a property should really get into the game during this last month. Hence, it doesn’t seem that the stamp duty holiday could be extended for more months and introduction of the tapering period seems to confirm the direction that the government will follow.

As always, things could change, were new data to be presented, but for now it seems very  unlikely.

So get on those listings sites, contact your real estate agents and start looking for your new home before the end of the month!