From July 2020 to June 2021, the stamp duty holiday meant for those who owned no other property (be you a first-time buyer or not), if you bought a property worth £500,000 or less you would pay no stamp duty.
If the property was worth more than this, you would only be paying stamp duty on the value of the property above that £500,000 and for anyone who did already own another property, you would also benefit from a reduced rate. Bear in mind that prior to this, first-time buyers already benefitted from paying no stamp duty on the first £300,000 of their property.
With this coming to an end, the benefit has reduced so that purchases under £250,000 attract relief. From September 2021, all temporary reliefs are due to come to an end and the rules will revert to the pre-June 2020 rules.
According to the Treasury’s Independent Forecaster, it is predicted that in the short term house prices will rise due to the extension to the stamp duty holiday but in the long term a drop in sales is expected when all the stamp duty reliefs come to an end in September.
In February, data from the Office for National Statistics (ONS) revealed that December saw the highest annual growth rate in house prices since 2014. Prices rose by 8.5% in December, with the average cost of £252,000 marking a record high.
By comparison, the ONS House Price Index from April 2021 suggests that average house prices in the UK increased by 8.9% over the year to April so the average house price in England is now £268,000. Although London is top of the list as the region with the lowest growth at just 3.3%.
The stamp duty holiday has been seen as a critical factor in prices rising, but there is no doubt the pandemic has influenced this. Spending more time at home with many working at home at least part-time has shifted people's focus on what they need from their homes. Many have decided they need more space both inside and out with the need for home offices, home gyms, increased garden space etc which may explain the slower growth in London.