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UK Property Market: What to expect post-Stamp Duty Holiday

As the Stamp Duty Tax Holiday comes to an end in England and Northern Ireland prospective buyers have a few considerations to keep in mind as they move forward with purchase plans. Let’s break down what the end of the holiday could mean for the property market.

What is Stamp Duty Land Tax?

In summary, Stamp Duty is a tax paid on property purchases by the buyers. As a result of the Covid-19 pandemic and its economic impact, the government announced a Stamp Duty Land Tax holiday last July to help buyers entering the market. The holiday meant that home buyers didn't have to pay stamp duty on the first £500,000 of a purchase price, saving them up to £15,000.

The holiday was later extended until 30 September 2021 and slightly modified so that buyers wouldn’t pay Stamp Duty on the first £250,000 of a purchase price, but as of 1 October 2021 (next month) rates will return to pre-Covid levels.

What does this mean going forward?

Following the boom in buying demand that resulted from the Stamp Duty Holiday, increased demand is still evident in the market despite low supply, with this imbalance set to stay according to National Estate Agency Savills, who has amended its house price growth projections at 9% for the year.

Savills also predicts a squeeze on affordability in the near future as the world slowly emerges from the pandemic, with employment figures predicted to return to pre-COVID levels and interest rates set to rise gradually, meaning now might still be the ideal time to move on purchase plans.

Regional growth remains diverse

Additionally, the geographical divide seen during the pandemic as workers left cities will still be evident going forward, with regional areas far from the capital likely to see the most growth.

Savills predicts the north-west of England will lead house price growth in 2021 with a 10.5% rise, while London is expected to see a 7% rise by the end of the year, and the north-south divide in terms of house price growth will likely only widen in years to come.

Low UK interest rates will support the market

The post-Stamp Duty Holiday period sees some of the UK’s biggest mortgage lenders announcing ultra-low UK mortgage rates, introducing a trend of sub-1% deals for borrowers with large deposits.

Halifax is the latest lender to follow the lead of the Nationwide Building Society (who were the first to offer a five-year deal below 1%) and are launching a two-year fixed-rate deal priced at 0.83% for borrowers wishing to take out a loan worth up to 60% of the value of their home. HSBC UK is also offering a two-year deal at 0.89%, which requires a 40% deposit.

This sub-1% trend from lenders is likely because they want to catch the eye of prospective borrowers and bring in new business following pandemic troubles and the end of the Stamp Duty Holiday, and could make now the ideal time to move forward with property plans.

As ever, consulting with property and finance professionals is the only way to know which way forward suits you best, and Tailor My Property’s experienced network of advisors and brokers can assist you every step of the way. Get in touch today to find out what your next step should be.


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