End of stamp duty holiday already starting to hit property market
01-26-2021
End of stamp duty holiday already starting to hit property market
On 31 March the stamp duty holiday ends, meaning buyers will have to find as much as £15,000 more to complete their purchases - and that deadline has already started to see people pull out of the market
ByJames AndrewsMoney Editor
There were fewer homes for sale and fewer people looking in December (Image: Getty Images/Cultura RF)
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The number of prospective buyers dropped 41% in December as the end of the stamp duty holiday drew in.
Across the UK, the average number of prospective buyers registered per estate agent branch stood at 348 down from 580 in November, the NAEA (National Association of Estate Agents) Propertymark said.
This marked the lowest number recorded since last May, when full lockdown was in force.
The average number of sales agreed per estate agent branch stood at eight in December, down from 13 in November.
Propertymark chief policy adviser Mark said: "While we would ordinarily expect to see a lull over the festive period, these numbers show that the tightening of lockdown restrictions, coupled with the reality that many individuals would no longer meet the stamp duty deadline, has exacerbated this."
People are walking away from prospective purchases
People are walking away from prospective purchases (Image: AFP via Getty Images)
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The stamp duty window means buyers escape the tax on the first £500,000 of any property purchase, if it's their main home.
People buying second homes or properties to rent out get the same level of relief, but don't escape stamp duty entirely.
But the way the tax break works means you need to complete your sale before April to qualify, with sales that finish after that liable to pay the tax as normal.
Given the recent surge in demand, the sales process is quite a lot slower than normal at the moment - seeing many people worried they will miss out or be hit with a tax bill they thought they had escaped.
And the effect is only set to get worse as we get nearer the date the window slams shut.
Hayward said: “As we approach the stamp duty [and equivalent Scottish and Welsh scheme] cliff edges on the 31 March, we are increasingly concerned about the pressure this is placing on the property industry with more than two-thirds of estate agents expecting to see an increase in failed sales due to buyers realising their sales will not complete ahead of the deadline.
"It’s important that action is taken now to prevent this and support the property sector.”
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But despite the slowdown compared with November, sales and buyers per branch performed well compared to past Decembers.
Property sales per branch were at their highest December figure 2006, while registered buyers per branch was the highest for the month since 2016.
But while sales were relatively strong for the month, there was a fall in people buying their first homes.
First-time buyers made up 23% of sales in December, compared with 29% a year earlier.