Today marks the next phase of the tapering of the Stamp Duty Land Tax holiday in England outlined by Chancellor Rishi Sunak in the March budget.
From 1st July to 30th September 2021 the price at which the nil rate band applies drops from £500,000 to £250,000. First time buyer relief returns to the first £300,000, 5% from £300,000 to £500,000 and standard SDLT rates above £500,000.
In Wales there is no tapered relief and Land Transaction Tax returns to standard rates from today.
While the SDLT holiday has undoubtedly played its part in the growth of the property market, the pandemic has driven one of the largest changes at home and lifestyle ever seen. Demand for properties with additional bedrooms which can be converted into offices has grown. Figures released by Rightmove estimates that 1.3 million buyers have benefitted from the stamp duty holidays across Great Britain since they were announced in July last year.
However home buyers may not have benefited as much as first thought from the savings available as the national average asking price of a home has increased by almost £16,000 since July last year, negating the SDLT savings in some cases.
Indeed, the latest research from comparethemarket.com has revealed that the leading reason for property sales falling through is gazumping, driving property prices up. Over the past year, nearly two-fifths (39%) of buyers admitted they had successfully secured their home by outbidding another offer which had already been accepted.
The latest figures from HMLR suggest that the property market will remain strong into the Summer and beyond. Rightmove’s Director of Property Data Tim Bannister said:
“Over the past few months the race for space has overtaken the race to beat the stamp duty deadline, with buyer demand and deals being done at higher levels than 2019.”
“Activity is still strong despite this first phase of the stamp duty holiday coming to an end in England, as prior to the extension being announced there was already a huge group of buyers deciding to move regardless of the stamp duty holiday.”
“The high level of activity is despite the fact that buyers are now faced with prices almost £16,000 higher than July last year on average, with the number of sales agreed up across all regions this month so far compared to June 2019.”
Demand will continue to be driven by the historically low interest rates as the Bank of England confirmed last week that the base rate would remain at 0.1%. While the return of 95% mortgages amongst the mainstream lenders and the government-backed mortgage guarantee scheme will continue to enable the first time buyer, and “second stepper” markets.
