Could End of Stamp Duty Holiday Be Cause of Housing Market Cooling

Could End of Stamp Duty Holiday Be Cause of Housing Market Cooling

The stamp duty holiday was put in place last year to assist home buyers in the housing market. The government offered complete tax relief for properties purchased up to £500,000. The deadline for the stamp duty holiday was set for the end of March. However, as the pandemic continued to impact the economy and as the deadline neared it appeared that home buyers were backing away. The decision was made to extend the tax holiday until the end of June where the relief would be reduced and the total end would occur at the end of September.

The stamp duty holiday has fully ended in Scotland and Wales. Currently there is tax relief for properties purchased up to the level of £250,000. In October, after the stamp duty holiday ends on 30 September, tax will only be charged on properties at up to £125,000 which is the normal rate.

According to some reports, the stamp duty holiday was perhaps a very major factor in buyers staying in the market. With the reduction, a drop in purchases has occurred. However, it could be more the fact that the average house price is far higher than the property price that allows a break with the stamp duty holiday.

House prices have broken records for all-time highs. This has pushed prices out of reach of many home buyers and their hope to buy has ended, at least for the time being.

The housing market is expected to still see strong demand going forward. It might especially be so as the pandemic’s impact remains and the weather causes more close contact between people triggering more cases. The desire for housing was spurred by lockdowns and the restrictions imposed by the pandemic. Its continued presence going into the end of the year could help keep the desire for a home with more space and outdoor areas as a top priority.

Unfortunately, the low supply in the housing market will keep house prices aloft. It might not put off the majority of hopeful home buyers and home movers. The continued ability to borrow cheaply with low interest rates could keep borrowers hoping for their pandemic lifestyle dream home. 

The full stamp duty holiday might have come to an end, but there are still many motivating factors to keep hopeful home buyers interested as well as home movers. The cooling off might have more to do with high house prices than the ability to save taxes or not. It was nice of course, and helpful, but it might not have been the key motivator in building the momentum seen in the housing market.

If the stamp duty holiday indeed is still having an impact on keeping the housing market busy, then perhaps another one should be in the works or an extension as the summer comes to a close, because the UK economy needs the housing market and all related businesses to be strong moving into the end of the year.

Obligation Free Remortgage Quotations

Get a Quote »