In a bid to boost the housing market in July, Rishi Sunak, the Chancellor, introduced the stamp duty holiday. Raising the threshold at which buyers have to start paying stamp duty from £125,000 to £500,000, saving the average homebuyer over £2000. By doing this, Rishi Sunak hopes that it will encourage buyers to push on with their purchases. Predictions earlier this year were made that house prices would tumble and cause market stagnation, it is hoped that by removing stamp duty on properties up to the value of half a million, this will be avoided.
The last stamp duty holiday was a long time ago, in 2008 which was introduced in a bid to lift the property market following the financial crisis. The then-Chancellor, Alistair Darling suspended stamp duty on properties up to the value of £175,000 for a year, costing the Treasury £600 million. The severity of the current crisis is highlighted by the government removing stamp duty on a property up to the value of £500,000, estimated to cost the Treasury 1.3 billion. However, more costly to the Treasury, the current stamp duty holiday will only last nine months, ending on 31 March 2021.
Why has the Chancellor introduced the measure?
Earlier in the year, there were calls for the stamp duty holiday to encourage people to move home and to help revive the housing market, however, it is not just about helping people move home, but the industry as a whole and its impact on the economy.
People who are moving home will need to organise their finances and utilities, and likely want to redecorate or improve their property. All of this contributes to the retail sector. The government would hope the savings filter into additional spending in the retail sector on household goods and improvements, rather than buying a bigger home.
Who benefits from the stamp duty holiday?
The coronavirus crisis effectively put the housing market on hold so the stamp duty holiday introduction was welcome news for buyers, agents, and developers.
Across the country, those in the South East and London were set to benefit most from the stamp duty holiday because the higher average prices meant that buyers in this region could make the biggest savings.
How can I take advantage of the potential saving?
To take advantage it’s important to have everything organised before it ends on 31st March 2021. The time it takes to buy a home can vary significantly, but generally, there’s a three-to-four month time lag between sale agreed and completion. There’s also the chance for backlog as other buyers take advantage of the holiday, therefore time is of the essence.
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