29 October, 2021
In July 2020 to stimulate a post-lockdown housing market many people have taken advantage of the stamp duty holiday since it was introduced by the Government. The Government initially intended to end the stamp duty holiday at the end of March 2021 but made the decision to extend it further until 30 September 2021. As sales return to their pre-pandemic levels, people are debating whether the stamp duty holiday should have been extended past the initial March deadline and how successful the Government's endeavours have been.
Not everyone is of the opinion that the holiday was worthwhile enough to merit being extended beyond March 2021. This includes Lindsay Judge, a member of the Resolution Foundation, an independent think-tank that informs public debate and conducts analytical research on living standards within the UK.
Despite believing that the introduction of the stamp duty holiday in July 2020 was vital to stimulate the housing market, Judge argues that extending the holiday past March had a negative impact, as house prices were pushed higher and became unobtainable for some. Additionally, a large amount of people had managed to save more money than usual as their jobs were unaffected by COVID, but they were unable to go out and spend their money. As such, they could have afforded a new home without the need for the holiday to be extended.
Although being aware of the positive impacts the stamp duty holiday had to begin with, Judge believes that the holiday put more strain on a market that was already struggling to supply demand. This resulted in a sharp rise in house prices, making the prospect of buying a home even more distant for many.
Amongst those who view the holiday as a success is Mark Bogard, chief executive of The Family Building Society. He believes that it allowed ministers to change issues with the UK housing stock, as trends show that people are living in the same house for longer to avoid paying stamp duty. For some, it is the barrier preventing them from purchasing their dream home. Not only did the holiday allow people to purchase a home they could not previously afford, Bogard believes that it created its own economic stimulus.
As people were empowered to buy a new home, the market became buoyant and a record amount of sales were made. The spending frenzy not only benefitted the property market, but others such as home improvements, valuations and removals. As no stamp SDLT was payable on purchases up to £500,000, Bogard believes that it benefitted the areas that needed it most, those which are the least wealthy. Ultimately, Bogard believes that there is no argument against continuing the stamp duty holiday past September 2021.
It is clear that the stamp duty holiday had both pros and cons. It encouraged buyers to purchase houses that they otherwise might not have been able to afford, whilst allowing the housing market to bounce back from the negative impacts of the national lockdown. However, this had the knock-on effect of inflating house prices and increasing the number of hopeful buyers within a market that is struggling to supply demand. As such, to extend the stamp duty holiday past September 2021 may not have had the same positive impact as when it was first introduced in July 2020. Only time will tell if the stamp duty holiday has had any long-lasting positive effects or whether it has hindered the property market. If long term benefits become apparent, we must consider if permanently reforming SDLT requirements, such as a higher nil-rate threshold, would be beneficial.
Our committed Residential Conveyancing department can help you navigate the busy housing market with ease. They are equipped to ensure that all transactions are dealt with efficiently and will ensure that all SDLT requirements are dealt with promptly, no matter what those requirements may be.
For more information contact Michelle Thompson in our Residential Conveyancing department via email or phone on 01254 222349. Alternatively send any question through to Forbes Solicitors via our online Contact Form.
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