While there has been a lot to focus on in the past year, there is no denying the importance of the stamp duty holiday. With a chance to save up to £15,000 when buying a home, many buyers have found themselves invigorated to be active in the active.
It has to be said that many people have benefitted. It is believed that 85% of home buyers benefitted from not paying stamp duty since the reprieve since last July. There are people, and bodies, who believe that the tax should be completely scrapped.
This is unlikely to happen, but there might be further changes to the stamp duty, that last longer than this summer.
Will there be further changes to the stamp duty system?
One agency conducted research on the housing market and they found that if the current holiday had been in place throughout the whole of 2020, 86% of English property buyers wouldn’t have paid stamp duty.
A total of 405,358 transactions wouldn’t have had any stamp duty at all. 62,695 transactions had stamp duty at the standard rate.
A lot of people can save money
Without any stamp duty holiday, buyers would have paid £4.1 billion, but with a full 12-month stamp duty holiday, buyers would have paid £1.7 billion in these fees. Therefore, this would have saved £2.4 billion.
One argument put forward is to increase the threshold at which no tax is paid, and this could be set at £750,000. At this level, 95% of all property transactions will pay no stamp duty. Even if the threshold was set at £350,000; 71% of all transactions in England would be positively affected.
Guy Harrington, CEO of residential lender Glenhawk, commented: “Whilst a short extension was inevitable given the backlog of transactions, stamp duty has been a strong revenue generator for the government and at a time when it can ill afford to be bleeding money, this is not a long-term solution.”
Guy continued by saying; “As with Help to Buy, a tapering of sorts would ensure that the relief continues to benefit those most in need, whilst avoiding a situation similar to after the first lockdown where transactions fell by as much as 50%. A housing market correction would only further add to the already considerable economic woes facing UK consumers.”
Marc von Grundherr, Director of Benham and Reeves, commented: “Stamp duty tax really acts as the property market definition of rubbing salt in the wound. After months, even years, of saving to get a foot on the ladder, homebuyers are then hit with thousands more in tax owed to the government. Other than the monumental failure to deliver on their housing promises, it’s hard to see what involvement the government actually has in the housing market and so calls for stamp duty to be scrapped are extremely valid ones indeed.”
Marc continued by saying; “But, of course, they will fall on deaf ears and homebuyers will continue to pay up for the pleasure of owning their own home. However, if the government were simply willing to meet in the middle and keep some level of stamp duty relief in place, the benefit to the market as a whole would be huge. Even increasing the lowest tax band to £350,000 would be a marked improvement and would go some way in helping beleaguered home buyers to get a foot on the ladder and to continue climbing it once they have.”
If you have any housing market questions or queries, please feel free to contact us. If you plan on selling your home, we recommend arranging a property valuation to ensure you make an informed decision. At Frank Schippers, we are here to support you in this trying time, and you can call us on 01344 777 888.
