How has the Stamp Duty Holiday Benefited Homeowners?

At the start of July, the Chancellor Rishi Sunak announced significant temporary changes to the Stamp Duty Land Tax. In a significant move to kick start the property market back into action and the broader economy, the Chancellor has increased the minimum threshold at which buyers are required to pay tax from £125,000 to £500,000.

While a stamp duty holiday is not a revolutionary tool used by government’s to boost market activity, this announcement has been widely accepted as a blessing from estate agents, homeowners, buyers and mortgage lenders. As the UK has slipped into the deepest recession in recorded history, economists, property experts and related businesses will eagerly be watching the real benefit of this move.

What does the stamp duty holiday mean?

The stamp duty holiday announced by the Chancellor at the start of July has increased the minimum threshold at which buyers will pay tax on the purchase of a property. Running from the beginning of July until the end of March 2021, it is hoped this will increase and encourage market activity in the third quarter of 2020 and the start of 2021.

The stamp duty holiday announced by the Chancellor has raised the minimum threshold at which buyers have to pay tax on the purchase of a property. Today buyers will not have to pay stamp duty on a property that is valued up to £500,000. For properties valued above £500,000, stamp duty is still required although rates have been significantly reduced.

Why have stamp duty rates been relaxed?

The relaxation of stamp duty rates was included in an extensive announcement of more comprehensive economic measures with the intended goal of kickstarting the UK economy back into action after three months of relative stagnation and forced lockdown.  Due to the interconnected nature of the UK economy, specific attention or focus has been paid to the property market in the hope of boosting wider productivity in connected sectors.

Through relaxing or getting rid of stamp duty on properties under £500,000, the government has hoped this will encourage potential buyers and homeowners back into the marketplace. The relaxation of stamp duty rates and the distinct will to encourage buyers back to the property emphasised the importance of the property market in any future recovery of the UK economy.

Has it worked?

Such an announcement will naturally be met with some form of controversy. However, so far, the government will be relishing in the wide support os has received across sectors

Since the government announced the stamp duty holiday at the start of July, it has been recorded that more first-time buyers have come to benefit from the tax savings.

The number of homes sold across the UK between the start of July and the start of August, the number of properties sold is significantly higher than the 5 year average, with properties valued under £1 million benefiting the most.

Furthermore, while property prices have naturally fluctuated since the re-opening of the market, the temporary halting of stamp duty has aided in the mini-boom in property prices the UK has seen in the past two months.

What does this mean for homeowners?

Although many would argue the temporary change to stamp duty rates would solely benefit buyers returning the market, it has, however, created an environment in which homeowners have benefited.

Fast House Sale

One of the defining features of the past three months is the speed of sale properties. While this cannot be attributed solely to the stamp-duty holiday, it most certainly has acted as a catalyst to encourage buyers back to the market. With pent-up demand for properties after the market re-opened and friendly house prices, homeowners who are looking to sell their house fast are benefiting from favourable market conditions.

House Prices

While house prices have naturally fluctuated since the re-opening of the market, the temporary changes to stamp-duty have been a reason associated with the recent mini property price boom the market has witnessed since May. Although reports by two of the largest building societies in the UK, Nationwide and Halifax, have recorded the first drop in the average property price for a number of years. Homeowners can have confidence in some form of a quick rebound in the remaining months of 2020.