The government has announced a stamp duty holiday until 31st March 2021, with property news sites widely reporting that, just a fortnight after the announcement, many regions had experienced a surge in demand for homes. But was this due to the stamp duty holiday. Did the Chancellor shoot his bolt too early?
The government made the decision to boost the housing market with a stamp duty holiday based on figures from the initial lockdown. However, many of the housing transactions that took place during the months of April and May were already in place before the lockdown with homeowners already committed to paying the tax.
Indeed, Property Surveying enquiries for surveyor services had already returned to pre-Covid levels before June, when the stamp duty holiday was announced.
Had the stamp duty holiday been kept in reserve until later in the year, when the housing market balanced itself out after the initial surge in activity following the initial lockdown, the government would have had a powerful weapon in reserve.
Surveyors are now concerned that the government has made another panic announcement by announcing the removal of planning measures.
First time buyers
There are now concerns that property investors taking advantage of the current market may affect the ability of first time buyers to find a new home. These first time buyers were already exempt from paying stamp duty on the first £300,000 of a property with a purchase price below £500,000. They will now have to compete with buy-to-let investors and second home purchasers who also qualify for the temporary stamp duty relief.
While the asking price of properties is known, we don’t yet know how the stamp duty holiday will affect sales prices. There are around 13% fewer properties on the market than a year ago, so buyers risk getting caught up in a seller’s market. Home buyers rushing into the market right now may find they are cancelling out any financial benefits from the stamp duty relief by paying over the odds in the frenzy to find a new home.
If you’re moving to a new home make sure you don’t cut corners in the rush to secure your purchase. Always take advice from a Chartered Surveyor when buying a new or old property.