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Post Stamp Duty Holiday – What’s Happening in the Housing Market?

By October 22, 2021 January 27th, 2022 No Comments

Moving house was one of the few activities that people were still allowed to do throughout the pandemic, even under the toughest lockdown restrictions. Stamp Duty was scrapped for a while but now that it’s returned to its former rate, we’re looking at what’s happening to the housing market.

Concerned that the effect on plummeting household earnings would have a negative impact on the housing market, the then-Chancellor, Rishi Sunak, devised a Stamp Duty holiday. This began in July 2020 with a welcome tax break on the first £500,000 of a property purchase for first time buyers. But how did this change the housing market?

Stamp Duty Holiday – a year in review

The Stamp Duty holiday saw house prices soar across England and Northern Ireland.

From July 2021 there was a staggered reintroduction of the former stamp duty rates until 1st October.

But now that date has surpassed, rates have now returned to their former rate before the holiday was introduced. This means if you are in the process of completing a house purchase, unfortunately you won’t be able to benefit from a reduction in Stamp Duty tax and you should factor this into your budget so there are no surprises.

What’s happening to the housing market now that the Stamp Duty holiday has come to an end?

The month-to-month price growth fell 3.7% after the 30 June tax break deadline, as well as a reduction in overall transaction numbers.

Furthermore, it’s predicted that a lack in available properties vs the numbers looking to buy could keep house prices fairly high during this time.

House prices are subject to change due to numerous factors, including location and the condition of the property. Properties that coincide with popular lifestyle changes will also be likely to generate a higher price bracket. Factors like having separate space for a home office, having easy access to rural, green spaces or a nice garden, are all increasingly popular considerations as more and more people are now working from home.

Current rates:

Up to £125,000 – no stamp duty
£125,001 to £250,000 – 2% stamp duty
£250,001 to £925,000 – 5% stamp duty
£925,001 to £1.5 million – 10% stamp duty
Above £1.5 million – 12% stamp duty

Easy ways to calculate your Stamp Duty:

If the constant fluctuations in Stamp Duty tax have got your head in a spin, you can always use the official stamp duty Land Tax calculator which can give you an up to date estimate of the total amount of tax you are likely to pay. A conveyancer can also help calculate how much stamp duty you will need to pay with a property purchase, and help you to factor this into the overall cost of moving house.

Is it a good time to sell or buy?

One of the key questions people will have now that the Stamp Duty holiday has come to an end is whether it’s a good time to buy or sell.

It’s best to get advice from a local mortgage advisor and estate agent as they will be able to advise on the state of the local property and mortgage market and whether there have been any significant rises or drops in house prices, the number of sales, or mortgage rates.

But on the whole, now is a good time to sell if you own property in a desirable location. As for buying, house prices do appear to be reducing, but you now can’t benefit from the discounted stamp duty. So, in other words, it’s up to you to weigh up the cost differences by researching any significant changes in house prices. However, with lots of people looking to buy and not enough properties going up for sale, you are more likely to encounter higher house prices, particularly if you get caught in a bidding war. It’s best to wait for the right property to appear and know how much you’re prepared to pay, remembering that mortgage lenders will only offer the actual value of the property, which won’t necessarily match the asking price.

Find a local mortgage broker

If you’re looking to buy a property and need a mortgage, speak to Agentis today to book your free initial consultation. We can advise on the current property and mortgage market to ensure you’re not caught out by significant changes in the market. As a ‘Whole of Market’ mortgage broker we can help you find the best rate for your circumstances.

David Mortell company director at Agentis Financial & Mortgage Solutions

David Mortell

David is Ce(MAP) and Ce(RER) qualified and has 14 years’ experience delivering top-rated mortgage and financial advice.In 2014, David took the plunge and started Agentis Financial & Mortgage Solutions with award-winning mortgage broker, Christine Long. Agentis has now become the brokerage of choice in and around Peterborough. David is also a director at our sister company, Agentis Wealth.