Estate agents urge stamp duty review as temporary holiday ends

An estate agents’ body is calling for a review of the “outdated” levels at which home buyers start paying stamp duty as a tax break ends.

Propertymark said the stamp duty holiday has been a success and its normal thresholds should now be reviewed.

The “nil rate” stamp duty band in England and Northern Ireland was temporarily raised to £500,000 in July 2020, enabling buyers to save up to £15,000.

This helped to turbo-boost the housing market which had nearly ground to a halt early in the coronavirus pandemic.

From July 1 this year, the holiday was tapered to £250,000, prompting a rush of activity before then as buyers looked to maximise their savings.

Buyers have still been able to make smaller savings of up to £2,500 under the tapered holiday.

From October 1, the stamp duty threshold will revert to its normal level of £125,000.

According to recent figures from Zoopla, the average UK house price has increased by more than £17,000 since the start of the lockdowns in March 2020 – outweighing the potential stamp duty savings to be made under the holiday.

Mark Hayward, chief policy adviser at Propertymark, said the temporary stamp duty holiday has been “a great success, creating a healthy and flowing market which has encouraged more people to buy and sell”.

He continued: “With the holiday at an end, it is now timely to review the outdated levels at which people start paying stamp duty to reflect market demand, average house price and wage growth, given the basic, pre-Covid rates have not changed since 2014.”

Propertymark said its figures show the average number of buyers per branch a month increased by more than 100 between July 2020 and August 2021 during the holiday.

There was an average of 445 buyers per branch during that time, which is higher than the average of 340 between April 2019 and June 2020.

The number of sales agreed per branch increased to an average of just over 11 per month between July 2020 and August 2021, compared with eight in the 14 months beforehand.

Nearly one in five (19%) homes sold for over the asking price during the holiday, compared with less than one in 20 (4%) before it was introduced, Propertymark said.

At the peak of activity under the holiday, 40% of sales agreed were above the asking price in June 2021.

Propertymark said official figures have shown that the number of transactions increased by a quarter during the stamp duty holiday compared with the previous 12 months.

With similar property tax breaks having already ended in Scotland and Wales, various reports have predicted that bustling activity will continue as people make lifestyle changes as a result of the coronavirus pandemic.

The Office for National Statistics (ONS) released figures this week suggesting that some young and low-paid workers face being priced out of living in rural and coastal areas as former city dwellers find they are able to work remotely.

A property tracker survey published by the Building Societies Association (BSA) this week found around one in four (26%) people still think now is a good time to buy a new home, with a similar number (25%) disagreeing.

House prices have already hit new records in recent months – and expectations of house prices continuing to rise remain high.

Nearly half of (46%) of people surveyed for the BSA expect further price increases in the next 12 months.

And separate research from Rightmove on Thursday found there has been a recent jump in people hunting for homes near commuter stations as more head back to the office to work.