We all know the feeling well: you’ve visited somewhere incredible for a couple of weeks, and then you find yourself back on a plane, which is slowly lowering itself away from blue sunny skies, into a thick, uncertain cloud above London, Birmingham or Bristol, and all you want to do is ask the pilot to turn back around. Coming to the end of a Holiday is never the best experience, and the Stamp Duty Holiday is no different.
The property market became a finely tuned, well oiled machine to cope with the high demand for completions within the stamp duty holiday deadline leading up to July 2021, but now we’re past that point, and we find ourselves within a period of uncertain cloud. Will it be thick cloud? Just a thin layer? Will it be raining beneath? Storming? Or just a little cooler than before? …We will soon see.
The stamp duty holiday ending has come at mid year, which is a time where traditionally, the housing market tends to slow anyway. Because of COVID19, most holiday makers won’t be going abroad this year, however, it’s already looking as though the new staycation industry is going to be booming, as many people yearn for a break anywhere that they can find one, something that was off of the cards in 2020.
This means that the traditional UK holiday period of July, August, and September, will most likely be with us in 2021.
Figures produced by Zoopla and OnTheMarket, where over the first half of 2021 the two platforms have been able to provide Estate Agents with an almost guaranteed 20 extra market appraisals per month between them, throughout June brought only on average 3, and July is currently mirroring June. I think it’s fair to say that this can be labelled as a ‘cliff edge’ for market appraisals, but a common annual ‘cliff edge’ that was avoided in 2020.
The timing of the stamp duty holiday ending near to the beginning of traditional peek holiday season makes it a little difficult to judge what life will be like after the stamp duty holiday, however, after official figures showing that the UK property market enjoyed, yet again, new heights of activity throughout the first half of 2021, we are now expecting the second half of 2021 to settle into what will be the new normal for the foreseeable future, which we feel will just most likely be a little cooler than before.
At Robinson David Estate Agents, we are very optimistic that the new normal after the stamp duty holiday will still be a very hungry property market, kept thriving by the demand for space from city leavers as they re-assess where they really want to call home after the pandemic. Prices can be expected to hold firm and high across Gloucestershire and The Cotswolds, because of the sheer lack of supply to meet so much demand. How long this demand continues will depend on how, and if, the government will be able to entice workers to choose going back into the office, rather than continuing to work from home so much.
Technically though, the stamp duty holiday isn’t over completely, only for up to £500,000, because government suggested that the end of the stamp duty holiday should be slightly staggered, to avoid a cliff edge ending. So, where mortgage advisors and solicitors were in a frantic rush to complete before July, they now find themselves in a similar rush to complete before September.
You Still Have Time to Save!
Some buyers can still benefit from the stamp duty holiday, as there is still a very appealing tax break available for the first £250,000 of a property purchase until the end of September. Normal Stamp Duty doesn’t come into effect until October 1st.
However, you’ll have to be quick to enjoy this, as usually a property purchase to completion can take about 3 months on average, but as mentioned before, the property market is currently like a finely tuned, well oiled machine right now, so the time has been slightly shortened, however, because of the high demand, property purchase to completion can currently take up to 4 months for those who do not have their ducks in a row.
For those who aren’t sure what stamp duty usually is, and will be again from October 2021, stamp duty is calculated as a percentage of the property you are buying. It applies to freehold and leasehold properties, whether you’re buying outright or with a mortgage.
For existing homeowners, the rates are:
- 0% up to £125,000
- 2% on £125,001 – £250,000
- 5% on £250,001 – £925,000
- 10% on £925,001 – £1.5m
- 12% on any value above £1.5m
For example, if you buy a flat for £275,000, the stamp duty you owe would be:
- 0% on the first £125,000 = £0
- 2% on the next £125,000 = £2,500
- 5% on the final £25,000 = £1,250
Total stamp duty = £3,750
You must pay stamp duty within 14 days of completing your property purchase. Your solicitor or conveyancer will usually file this return and transfer the money on your behalf.