Stamp Duty Holiday blues? How has it affected the housing market and can you still benefit from it?
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There’s no doubt the government's Stamp Duty Holiday was successful in its intention to boost the UK housing market, with unprecedented levels of property transactions taking place over the last year.
But as we near the end of the temporary tax reductions, what does the future of the market look like for those wanting to buy and sell?
Nicky Marsh, Senior Associate and Conveyancing Solicitor at Dutton Gregory Solicitors, tells us about the knock-on effect of the Stamp Duty Holiday and shares her thoughts on whether now is a good time to be moving house.
Q: When does the Stamp Duty Holiday end?
A: Since the launch of the UK Stamp Duty Land Tax (SDLT) Holiday last July, homebuyers haven't had to pay any tax on the first £500,000 of the purchase price of a new property.
The end of the tax break was extended from March to June 30, 2021, with reduced rates still available until September 30, 2021. Those who purchase a new property during this phasing out period won’t have to pay tax on the first £250,000 of the purchase price, with Stamp Duty rates returning to normal in October.
Q: What effect has the Stamp Duty Holiday had on the property market?
A: I think I speak for all property solicitors when I say that since the Stamp Duty reductions came into effect, transactions have been at a level we have never seen before.
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As well as the attractive prospect of saving on the cost of buying a house, people have had more time to reassess their living arrangements over the last year due to lockdowns. This has led to a huge rise in those wanting to move home, with broadband speeds, home offices and outdoor space being top priorities for most.
As a result of this property mini-boom, house prices have increased vastly – in the last 12 months, the cost of property in Hampshire has gone up by 10.4 per cent.
Q: Is now a good time to buy or sell a house?
A: What I always advise my clients is that house prices are relative. Even if there is a slight lull after the Stamp Duty Holiday ends and prices don’t continue to increase at the rate we have seen, there will always be an active housing market.
There are also lots of government initiatives to take advantage of right now, especially for first time buyers. Shared Ownership is very popular at the moment and the government has agreed to give its own guarantee to lenders in respect of 95 per cent loan to value mortgages, which will keep the market moving as all links in the chain are proceedable.
Q: Has the last year had an effect on housing transactions?
A: Before the looming Stamp Duty deadline in June, the length of time for exchange went from around 12 weeks to around 16 weeks or more across the country. However, at Dutton Gregory, we were able to achieve completions in much shorter timescales with some innovative ways of working.
There have been frustrations over the last year with many third parties – including lenders, local authorities and Land Registry – not being equipped to deal with home working or the sheer volume of work, which slowed down the transaction process. However, those industries have now streamlined and taken onboard more efficient processes, which will only benefit people wanting to move in the future.
Q: What is the outlook for the UK property market for the rest of 2021?
A: I think it’s still going to be a buoyant market with its usual peaks and troughs. People will always need to buy and sell houses, and at the moment we’re not seeing any decrease in the number of instructions we’re getting through.
Demand is exceeding supply – in other words, there’s less houses coming onto the market than there are willing buyers, which should change over time. House prices should not dramatically go down but I do think the current level of increase will even out.
Q: Any further advice for homeowners looking to move?
A: I always advise people to speak to a solicitor in the early stages to give them a better idea of what to budget for. There is also quite a lot of paperwork to complete in a property transaction, which we can help with. Preparation is key – there are lots of things we can do in advance to help make the process smoother.
At Dutton Gregory, we pride ourselves on the high level of communication we have with our clients, whether it’s via phone, email or in person. We’ll always keep you fully informed at every step of the sale process and take away the stress of moving house.
For advice on buying or selling property, call Nicky on 01962 587067 or find out more about Dutton Gregory Solicitors by visiting duttongregory.co.uk.