The stamp duty holiday has been a phenomenon. It has achieved exactly what the government hoped it would when they announced it in Spring 2020, creating a year of unbelievable market demand and activity.
Buyers have rushed to take advantage of the tax relief and sellers have been happy to oblige, seeing the opportunity to sell their home for a great price to fund the next phase of their lives.
But all good things must end and the stamp duty holiday is scheduled for a gradual phase-out starting in June 2021, having already been pushed back from March. This deadline is causing anxiety for many prospective buyers because the typical house purchase is now taking far too long to complete, creating a real chance that the deadline will be missed.
This fear is especially real among those buyers who have tight budgets to work with and for whom a £5,000 tax break would be invaluable. However, it’s really important to remember that, even in normal times, a lot of properties can be purchased without any stamp duty whatsoever.
Below the threshold
There is no stamp duty to be paid on any homes under the value of £300,000 – this is always the case, regardless of the SDLT holiday. The average first-time buyer spends just under £222,000 to get on the ladder, comfortably below the SDLT threshold.
According to research by Ascend Properties, this means that almost 80% of the UK housing market will remain SDLT-free for first-time buyers, even after the holiday ends.
This is a simple but important fact that much of the media attention surrounding the SDLT holiday fails to make clear to buyers. So our message to first-timers is, don’t panic and don’t rush into any decisions due to the pressure of the looming deadline. Providing that you don’t intend to spend more than £300,000, there will still be a great choice of properties for you to choose from, wherever in the UK you live.
That is, of course, unless you plan to buy in London, where the average first-time buyer spends £433,631, far above the SDLT threshold in normal times, yet just underneath the £500,000 threshold during the current holiday.
At the other end of the spectrum, the North East provides the most affordable housing market, with first-time buyers typically spending less than £120,000, followed by just over £150,000 in Yorkshire and the Humber, and £155,000 in the North West.