Stamp Duty Land Tax Holiday Enters Second Phase
Covid-19 has catalysed many changes across the world and arguably one of the most impacted sectors has been the property market – especially in the UK. UK property has seen some of the biggest transformations over the past 16 months – from a temporary market closure to the release of pent-up demand and a ‘London Exodus’, we’ve seen some unprecedented changes within the sector.
The Stamp Duty holiday has been one of the most notable consequences for the property industry so far and has underpinned the majority of changes we have seen across both the sales and rental markets. At the root of its success, and the current driving force behind the UK property market, is the opportunity for both homeowners and investors to save thousands of pounds on their purchase.
What is the Stamp Duty Holiday?
Since 8th July 2020, the UK has been on a Stamp Duty Holiday. Stamp Duty Land Tax is a necessary requirement for anyone purchasing a property within the UK, an amount which is determined by a variety of factors, but predominantly the value of a property. Generally speaking, the more expensive the property, the more Stamp Duty Land Tax you stand to pay.
Pre-Covid-19, the Stamp Duty Land Tax threshold stood at £125,000, meaning anything above this was subject to the tax, but with the global pandemic effectively halting the market, the nil band rate was pushed to £500,000 to encourage transactions.
What are the changes to Stamp Duty Land Tax?
Initially, the Stamp Duty holiday was due to run from July 2020 – 31st March 2021. However, as the new year approached, and the demand for property continued to climb, many homeowners faced missing the deadline completely.
In the Spring Budget speech in March 2021, the Chancellor announced that the Stamp Duty holiday would remain in some capacity until the end of September. To replace the initial deadline, a gradual easing of the Stamp Duty holiday was introduced, with the next phase commencing on 1st July 2021.
From 1st July, the nil band rate will drop to £250,000, meaning anyone purchasing a property over this amount will no longer be exempt from Stamp Duty Land Tax. This threshold will remain until the end of September, and from 1st October, those purchasing a property over £125,000 should expect to pay Stamp Duty Land Tax.
The ripple effects of the Stamp Duty holiday have been undeniable, and the extension to this tax exemption has meant hundreds of thousands of buyers have had the opportunity to save on their property purchases.
Not only were over 400,000 sales still in the pipeline leading up to the initial Stamp Duty holiday end date, but now more and more buyers are taking the opportunity to either move or get on the property ladder, with over 700,000 homes currently going through the sales process.
We’ve already seen the average UK property price make history at over £340,000, but with three months yet to go until the nil band rate returns to the pre-Covid-19 level, could we see the property market progress further?