The stamp duty holiday which was introduced in July 2020 came to an end at the end of September in England and Northern Ireland. From October stamp duty has returned to pre-pandemic levels and is payable on all purchases over £125,000 and a question we are being asked by our clients is ‘How much stamp duty do I have to pay now?’
Stamp Duty Land Tax is a tax paid on property purchases. The government introduced a temporary ‘holiday’ in stamp duty during the coronavirus pandemic to help people who had their finances negatively impacted by the situation. This cut allowed the housing market to continue moving and therefore helped to keep the economy moving too.
The stamp duty holiday meant that until 31st March 2021 home buyers did not have to pay stamp duty tax on the first £500,00 of a purchase price, meaning a saving of up to £15,000. After that the threshold was lowered to the first £250,000 of the purchase price. Now that the holiday has ended, the threshold has returned to the pre-pandemic level of £125,000.
From the 1st of October the stamp duty rates have reverted to their pre-COVID levels. This means that the amount you will pay will be on a sliding scale depending on the purchase price of the property. No stamp duty is paid on purchases below £125,00:
The government have a Stamp Duty Land Tax (SDLT) calculator to find out how much you will pay.
The stamp duty holiday certainly contributed towards stimulating the housing market. There was a record increase in house prices of 13.2% in June as people rushed to complete before the end of the holiday and a further rise of 8% in July.
While is is clear that the stamp duty holiday played a part in the surge of interest, and therefore price rises, in the housing market, there were other factors to consider. The lockdowns caused by the pandemic triggered what has been referred to as ‘the race for space’ with people looking for larger properties and properties with more outside space. As the lockdowns eased people realised that a flexible approach to home working was much more achievable and so the need for space to work from home, or have an office in the garden fuelled the demand. Even through a lot of people have returned to the office, a lot of companies are offering a hybrid approach to their workforce, meaning a mix of time in the office and time at home. This has had benefits for huge numbers of people who now save time and money through not having to commute as much, if at all.
As well as the desire for more space, the lockdowns created ‘accidental savers’. People were not spending money on eating out, socialising, holidays or commuting and so were able to save money. This, coupled with low interest rates has meant that more people are in a position to move.
House prices have also been pushed up due to a lack of housing stock, there are not enough houses being built to meet demand, which creates a sellers market and pushes prices up.
It is a combination of events that saw house prices rise so quickly. The market continued strongly through September and only time will tell if it will start to slow now that the stamp duty holiday is over.
If you are looking to purchase house and are unsure if the house you want is a good prospect, please do give us a call. All of our surveyors are independent and RICS registered. They will provide you with an unbiased view of the condition of the property and give you a much more informed idea of whether or not to proceed.
Our surveyors are friendly and approachable and will be happy to talk you through their findings to ensure you fully understand the report. The surveyors all have good local knowledge of the area that they cover. Get in touch today to see how we can help
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