‘Busiest six months in 57 years’: Stamp duty holiday causes pandemonium in property sector
The last week has seen chaos for buyers trying to beat the stamp duty holiday deadline, and long hours and stress for all other parties involved in the process.
This week homebuyers were in a race against time to beat the deadline on the most generous stamp duty holiday, which ended at midnight last night.
From today, the “nil rate” stamp duty threshold will halve to £250,000, down from the £500,000 figure it had been set at since last July.
The stamp duty holiday set fire to the housing market, driving property prices through the roof as buyers sought to take advantage of the tax holiday.
According to Nationwide’s latest figures, house prices have experienced the highest rate of annual growth since November 2004, while figures from Halifax recorded the average property price has shot up by £22,000 in the last year.
Those operating in the sector, from estate agents, to removal companies, to conveyances, have been working flat out to try to meet their clients’ wishes and complete before the tapering off of the tax holiday.
Stephanie Boyce, president of the Law Society, said a range of factors had come together to create the “perfect storm” for the housing market, and that solicitors had been working around the clock to get clients over the line before the deadline.
“It’s very stressful for those wishing to move,” she said, “[And] capacity is stretched across the board – from local authority searches via delays in mortgage offers through to unforeseen hiccups further along the chain.
Unfortunately, she added, many people risked seeing the deadline come and go without completing their purchase.
Kim Kaveh, a London-based personal finance writer and first-time buyer, was one of those who missed the deadline. A last-minute hitch involving a lost document meant she was unable to complete on her flat before today – a mistake that will cost her around £8,000.
“I’m gutted. I’m so disappointed that through no fault of my own I’m having to fork out thousands of pounds that I didn’t anticipate spending to pay stamp duty,” she said.
“I would have bought without the stamp duty holiday, but my decision was definitely rushed because I wanted to save the money. It was a strong incentive to try to get on the ladder. Now the money it’s going to cost me in stamp duty will mean I can’t afford to furnish the flat properly.”
Charles Rickards, finance and marketing director of Aussie Man & Van, a London-based moving company, painted a picture of just how manic the market has been in the weeks running up to the holiday’s end, describing the time as “phenomenally busy” for removals.
“The stamp duty holiday, combined with low borrowing costs and the desire for more space, has coincided with our busiest time of the year, and we haven’t stopped,” he said.
“Our removals firms have been flat out; we are normally fully booked two weeks in advance but this has increased to four weeks and even though we are working seven days a week, we can’t meet all the demand.”
Despite prices rocketing in response to the tax holiday, saving on stamp duty proved an excellent incentive for those considering moving. Simon Gerrard, managing director of North London-based Martyn Gerrard Estate Agents, said the last six months had been the busiest in the company’s 57-year history.
“The level of activity we’ve seen across many of our branches over the first six months of this year has not just eclipsed 2020, but broken records,” he said, adding that the number of potential buyers registering with his firm is still up more than 40 per cent on pre-pandemic levels.
Chestertons CEO Guy Gittins said his firm had seen three times more buyers than usual this year, leading to competitive bidding on homes, pushing property prices even higher.
Cliff edge?
There are some signs the manic market is slowing. According to figures from RightMove, house prices rose just 0.8 per cent in June, a more modest jump than May’s 1.8 per cent increase, or April’s 2.1 per cent.
Nevertheless, a “cliff edge” situation looks unlikely, estate agent Gerrard said, adding that enquiry levels and sales agreed over the past month suggested “all signs are pointing towards the rest of 2021 continuing to break records”.
He said the remaining tapered stamp duty holiday would still persuade some people to move and save money on tax, while pandemic-led lifestyle changes would continue to drive appetite across the market.
But Ross Counsell, chartered surveyor and director at GoodMove, indicated the market would deflate from October onwards.
“We can expect to see a decline in demand from October once the deadline officially ends, and expect this to be a better time to buy a property this year before rushing to try and meet the deadline.
“For anyone looking to purchase a property, the advice is simple – hang fire. If the statistics are reflective of anything over the past year, the stamp duty is of benefit to only one side of the coin – the sellers. If buyers can wait it out until the end of the deadline, they should expect to save a significant amount of money on a property.”