There is little doubt that the stamp duty holiday has boosted, sustained and generated momentum in the housing market since it was introduced nearly a year ago by Chancellor Rishi Sunak.
Demand has been at record highs, and this has translated into record numbers of transactions working their way through the system. What’s more, despite the numerous challenges provided by Covid, house prices have continued to rise, with asking prices recently reaching a seven-year high
Some have suggested the stamp duty holiday has been of little help, with any savings wiped out by much higher mortgage deposits
, but separate research has predicted that 500,000 home buyers will have benefited from the holiday
once it comes to an end, to the tune of £3.4 billion in total. This has included many in the North West, with buyers, sellers, investors and landlords alike eligible for the savings.
Having been extended at the March Budget to the end of June, following huge public and political pressure for this to happen, the holiday in its current format (which means anyone buying a home worth up to £500,000 is exempt from paying stamp duty) will come to an end on June 30 2021.
After that point, the nil rate threshold will be reduced to £250,000 until September 30 2021. From October 1, the nil rate threshold will return to its pre-Covid level of £125,000.
How many transactions will beat the stamp duty deadline?
According to a recent analysis by leading portal Rightmove, there are currently more than 700,000 homes marked Sold Subject to Contract and going through the conveyancing process right now, the highest number the website has recorded over the past decade and some 78% higher than two years ago.
At the beginning of 2021, the sales pipeline across Britain stood at 613,000 – already a very high number – but the market frenzy over the past few months thanks to the extension of the stamp duty holiday and the introduction of initiatives like the 95% mortgage guarantee scheme has led to homes being marked as sale agreed at a faster rate than they are completing.
As a result, in a survey by Rightmove, just 29% of buyers who were asked said they expected to complete in time to make use of the stamp duty holiday.
Of those who said the stamp duty saving was key to their purchase, a reassuringly low 4% said they would abandon their plans completely if they missed either the June or September deadline.
By comparison, more than half said they would go ahead as planned, while one in four said they would try to renegotiate with the seller. Meanwhile, 13% said they would try to find a cheaper home.
Rightmove said that, of the 704,000 sales going through, 220,000 were marked as Sold Subject to Contract between July last year and the end of February this year in England and are yet to complete, while the current average time from sale agreed to completion is four months.
The findings showed that, of these 220,000 sales, there are 131,000 priced above £250,000, the group which most urgently needs to get their sale over the line before the end of June when the stamp duty holiday drops to homes worth £250,000 or below in England.
“The easing of restrictions, extended stamp duty holiday, better mortgage availability for first-time buyers, race for space and relocation plans have all combined to create the biggest conveyancing logjam we’ve ever recorded over the past 10 years,” Tim Bannister, Rightmove’s director of property data, commented.
“We really hope those who had at least four months to make it through to completion will make it in time to beat the first stamp duty deadline, but with the tapering until September many will still make some savings so all will not be lost.”
He added that the pace of properties coming on and off the market is the quickest Rightmove has ever recorded, with agents having multiple viewings followed by a number of offers within days of a property first appearing on Rightmove.
“At the start of this year we had anticipated a quieter second quarter of the year, but buyer demand and the pipeline has continued at pace, making it an incredibly busy time for agents and conveyancers in many areas right now,” he concluded.
Will there be a drop-off after the end of June?
The biggest reason for the stamp duty holiday extension was worries over a cliff-edge scenario, where thousands of buyers and sellers would pull out at the last-minute or sales would collapse because of a sudden end to the stamp duty holiday.
There were fears this could happen again at the end of June – however, despite there being a huge number of sales in the pipeline, Rightmove’s research above and findings from elsewhere suggest that most buyers will continue with their house purchase as planned, even if they miss out on the deadline.
What’s more, the stamp duty holiday will still be applicable for the majority of home buyers who are buying a home worth £250,000 or less, which should help to keep demand and motivation high.
There is likely to be some drop-off in activity after June 30, but to which level remains unclear. A drastic fall in activity is unlikely, however, with other incentives for buyers besides the stamp duty holiday.
Record low interest rates are making borrowing more appealing than it has for many years, and this is reflected in many favourable mortgage deals on the market for all types of buyers. In addition, there is the 95% mortgage guarantee scheme to help buyers get on the ladder or move up the ladder with a much lower deposit.
The government-backed scheme, which officially launched in April, isn’t only restricted to first-time buyers – like most other government schemes – but all types of buyers. This, again, should help to keep demand high.
As well as this, summer is generally viewed as a good time to buy and sell property, because of the better weather at play and the greater number of daylight hours for people to view homes. Many families want to be moved in before the school term starts, while people generally prefer to move home when the weather is warm and dry, as opposed to cold and wet.
Here at Farrell Heyworth, we can help to sell your home – from windmills
to traditional homes – across the North West. We can talk you through the different stages of the stamp duty holiday and why demand should remain high for the second half of the year.
Our team are on hand to advise you on any part of the moving process
and can provide you with a virtual property appraisal. You can also kickstart the sales or letting process by requesting a free and instant online valuation
We are doing all we can to help our customers navigate moving home under Covid-19 restrictions safely. You can read more about our safe and responsible service here
We also encourage all our customers to register with our My FH portal
, which will give you access to the most up-to-date information; remotely and at your convenience.