What the end of the stamp duty holiday will mean for the housing market
The stamp duty holiday, which was introduced in on July 8, 2020, as a means of helping buyers who may have been subjected to a financial loss due to the Covid-19 pandemic, is coming to an end.
The Stamp Duty Land Tax Holiday was extended from the previous deadline of March 31, 2021. It is now due to start tapering off on June 30, 2021. The tapering period will come into effect on July 1 and last until September 30. During this time there will be a nil-rate stamp duty band on properties up to the value of £250,000. From October 1, 2021, the stamp duty threshold will revert to its normal rate of £125,000.
With the stamp duty holiday being phased out, we ask how the concluding of the cost-saving policy for homebuyers may impact the housing market.
It’s no secret that when the policy came into effect, it led to a surge in demand for property and transactions going through. Despite the challenges of the pandemic, house prices in Britain have risen dramatically in recent months. The rise has been associated with the stamp duty holiday.
The industry is under pressure
The property market is immensely busy at present. As homebuyers grapple to purchase property before the stamp duty holiday ends, property transactions are taking longer to complete. This is putting the whole industry under pressure, with conveyancers, lenders, surveyors, and agents feeling the strain.
Such is the pressure, that a petition is in circulation, calling for the stamp duty holiday to be enabled upon of exchange of contracts instead of completion.
Will the market ‘level off’?
When the chaos of getting transactions complete before the holiday on stamp duty ends, levelling off in demand is expected. As is a return to more normal timescales to complete the transaction of properties. Some are of the opinion that house prices will start to fall once the tax relief policy comes to an end, though this is, of course, speculation.
Other commentators in the industry believe the end of the stamp duty holiday is unlikely to have any real affect on the market. One such thinker is Knight Frank, an estate agency and property consultancy firm.
According to Knight Frank, the stamp duty holiday has only had a limited effect in distorting the housing market and the phasing out of the tax break is unlikely to greatly impact the industry.
The surge in activity in the property market, regardless of what the sector does in forthcoming months, highlights the importance of having residential property insurance in place.
Nelson Policies at Lloyd’s provides Residential Property Owners insurance and continues to offer quotations and service levels in a very timely and efficient manner. Get in contact with the team to learn more about the cover we can provide.Back to Blog
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