The Stamp Duty Holiday, a tax break which has spurred the UK housing market into overdrive throughout the pandemic, recently began to wind down. Until 30th September, buyers will only benefit from the break on the first £250,000 of their property, as opposed to £500,000 before 30th June this year.
Although the stamp duty holiday isn’t over yet, the property market is already beginning to recover from the overload of demand. Local property experts and owners of X-Press Legal Services South and West Yorkshire, Claire Ide and Helen Foster explain that it might be better to buy a property now the tax break has eased, allowing you to take advantage of more benefits.
Claire comments: “Over the past year the property market has seen a phenomenal level of activity, with a boom spurred by pent-up demand from the early stages of the pandemic and various government incentives. Whilst this is certainly positive as many industries haven’t been so fortunate, we know many conveyancing professionals are keen to return to a more normal pace.
“Despite the gradual tapering of the SDLT holiday, many lenders are continuing to offer low-rates of interest. Prospective buyers will still want to take advantage of sub-1% mortgages whilst not paying the inflated prices which have dominated the market and only grown since the start of the holiday.”
As consumers rushed to benefit from the tax-break, house prices have soared. From the start of the year until June, house prices rose by 13.4% - a rate not seen since 2004. However, this rise now shows signs of slowing and buyers could benefit from lower house prices if they wait a few months more.
Helen comments: “We expect house prices which have been inflated will start to slowly drop over the next few months, as sellers lower their valuation to move more quickly, or upon realising a lack of interest due to overstated prices.
“Many trends which have been spurred by the pandemic including a rush to rural areas and away from urban centres could switch, as many begin to return to the office. Knock on effects could help to lower house prices in counties and towns but see those in cities drastically increase again- which could affect Yorkshire house prices drastically, with homes in rural towns and villages becoming cheaper as workers head back to the cities.”
Throughout the SDLT break, many lenders demanded buyers put down higher deposit levels than before, making it more difficult for some, especially first-time buyers, to buy a property. As demand decreases, these buyers will be able to benefit from lower rates whilst not having the need for huge deposits - making it easier to get on the property ladder.
An issue that has frustrated some home-buyers wanting to benefit from the tax break has been delays in the conveyancing process, in particular local search turnaround times in certain regions of the UK.
Claire explains: “As property search specialists, we liaise with local councils every day to access information which is vital to the conveyancing process. Much like other parts of the conveyancing sector, many local councils and search departments have been under incredible pressure throughout the holiday, and many didn’t have the technology to meet this increased demand - leading to huge backlogs in turnaround times for reports.”
Now that the stamp duty holiday has begun to taper off, local councils can catch up and new transactions may benefit from quicker turnaround times. This means buyers can be in their homes quicker; reducing issues with chains and easing the stress of moving home.