June 30 2021 is when the Stamp Duty ‘holiday’ in its current form at least will end. The Chancellor, Rishi Sunak, introduced the temporary Stamp Duty Land Tax (SDLT) in July 2020 to boost the housing market following the first national lockdown. The aim was to save buyers from paying stamp duty on any properties valued at up to £500,000 – a saving worth up to £15,000.
A combination of the SDLT tax break with pent up demand and a lockdown-inspired desire for more (particularly outdoor) space means that the housing market has been at its busiest for almost a decade. Shoosmiths has certainly experienced a record number of completions for its clients (in normal circumstances it’s national conveyancing teams complete in the region of 10,000 transactions a year).
Not quite the end for SDLT relief
However, Suman Dally, Head of Shoosmiths National Conveyancing service, points out that, strictly speaking, it’s not really the end of the SDLT holiday on 30 June:
“The scheme runs to end September although there is substantial tapering from July where only £2,500 can now be saved on the value of a purchase over £250,000 (presently up to £15,000 can be saved on a purchase over £500K.). The nil rate band then settles back to £125,000 from 01 October 2021.”
Future impact on the property market
There is no doubt that the Chancellor’s stimulus to the wavering housing market back in July 2020 had precisely the effect intended, to further fuel rising demand. But that demand outpaced supply and led to above inflation house price increases. In many cases these increases have eaten into, and entirely consumed, the tax saving that was intended. With volumes being compressed into the window of opportunity it is possible that the market may soften and possibly even undergo some price correction as the relief window closes. In that case buyers may then seek to re-negotiate prices with their sellers.
Suman maintains that the property market will remain buoyant even after SDLT relief finally ends:
“Certainly, if the reduction and end of the relief means the end of the current frenzied pace of transactions that will be welcomed by conveyancers who have been heroically working to fulfil their clients’ ambitions. However, whilst the supply of property remains low, combined with low interest rates, the government’s desire to manage inflation and many would-be purchasers having substantial savings pots through Covid constraints on their usual spending behaviours, we believe that the property market will remain strong for the future.”