The stamp duty holiday, which was launched back in July 2020 as a response to the pandemic and its wide-ranging effects on the UK economy, was finally brought to an end in October 2021 after a transition period that kicked off in June 2021.
For those looking at buying a home, this stamp duty holiday has meant that any property under £500,000 has been saved from paying any stamp duty – a fee which usually ranges between 2% and 12% of the total purchase fee for a property over £125,000.
As a removals firm, the introduction of the stamp duty holiday kept our business moving – buoying up the housing market through a time when it looked like it could all come crashing down. So, with the holiday at an end, what does this mean and could the concept behind the stamp duty holiday make a return in the future?
Why was the stamp duty holiday introduced?
According to HMRC, the stamp duty holiday kept the housing market afloat and was one of the main factors responsible for increasing property sales by 219% between June 2020 and June 2021.
Other factors we must consider regarding this increase in sales include the rise of demand for more living space and the increase in disposable income accrued by those looking to buy second homes. However, it was the stamp duty holiday, which is usually only enjoyed by first-time buyers under £300,000, which saw more people moving house, purchasing second homes, and making the most of the drop in fees attributing to a purchase.
What did the stamp duty holiday mean for buyers and businesses?
The number of people moving home during the pandemic was a direct result of the need for more space, the increase in demand for properties outside of cities with more outdoor space, and of course, the added bonus of the stamp duty holiday, which saved buyers and movers thousands of pounds.
For first time buyers, stamp duty only comes into play for properties over £300,000. Anything above this is subject to the percentage fee. However, the main benefit for first-time buyers is a stamp duty relief for anything below that £300k price.
Second homes are not only subject to the standard stamp duty fee for a property over £125,000 but are also subject to an additional 3%, while those moving house only pay the standard percentage rate. The stamp duty holiday saved movers a fee for anything under £500,000 and meant that second home buyers only needed to pay the 3% – nothing more. And so, people exercised this new benefit and started buying second homes and moving home.
This concept was great for our business and other moving businesses and estate agents. But not such a great move for first-time buyers who now found themselves competing against buyers with more capital and greater mortgage rates – all fighting for the consistently low number of properties to meet such high demand.
Could the stamp duty holiday make a return?
The fact is that the stamp duty holiday saved home buyers a big chunk of money – raising the minimum spend for a fee from £125,000 to £500,000. For the last few months before the end of the holiday in October 2021, this minimum property price was reduced to £250,000 to ease buyers back into the standard stamp duty payments – a move which was responsible for the flurry in house movers and buyers during the Summer of 2021.
But with the stamp duty holiday now at an end, is it likely to make a return?
Experts predict that the end of the ‘Covid’ stamp duty holiday will mean a dip in property prices as a direct response to the decrease in demand following the end of the stamp duty holiday. This is because, during the break-in stamp duty fees, demand was at an all-time high with more people than ever before looking to move – now that the fees are back at their usual rates, we expect that this demand will cease and so properties will need to be more competitive in their pricing if they want to be sold.
It is also worth noting that the end of the stamp duty holiday coincides with the end of the furlough scheme, which could see job loss on the rise – another factor that will decrease demand for property.
However, on the plus side for the property market, demand from both first-time buyers and movers was consistently high before the pandemic and the stamp duty holiday. So it is unlikely the pool of buyers will be vastly reduced in the coming months to the end of 2021 and beyond. The rising desire for more space and outer-city properties will also continue as people look to continue to work remotely. We certainly do not anticipate city to country sales and moves to dry up anytime soon.
Our Conclusion
The stamp duty holiday helped the property market and associated businesses during a time when property sales and house moves could have dried up completely – giving people an incentive to purchase property and move home.
Now that this stamp duty holiday has come to an end, we don’t see it returning anytime soon due to the continued demand from first-time buyers and those looking to move to the country and purchase second homes – however, now that the scheme has been trialled and proven to be successful, there is definitely a market for a break like this in the future should the housing market ever face challenges again.
For information on how we can support, facilitate, and manage your move to a new home, get in touch with us.
