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House prices 2021: How has the property market changed in the wake of stamp duty changes?


THE HOUSING market has boomed amid the coronavirus pandemic as many homeowners have moved from cities seeking homes with more green space, but how has the market been affected since the stamp duty holiday was scaled back this month?


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House prices across Britain soared amid the stamp duty holiday period with many homes in sought-after areas being chased by multiple buyers. Bidding wars and gazumping became commonplace amid this period of intense demand. speaks to property experts about how the property market has been impacted by the scaling back of the stamp duty holiday.

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Stamp duty rates in England and Northern Ireland changed on July 1 after a holiday was rolled out in June 2020.

Holiday rates will remain in effect until October but will be phased out each month until then.

From July 1, stamp duty kicked in for properties above £2650,000 at the following rates:

£0-£250,000 - 0 percent
£250,001-£925,000 - five percent
£925,001-£1,500,000 - 10 percent
£1,500,000 and above - 12 percent.
From October 1, rates will return to normal which equates to the following:

£0-£125,000 - 0 percent
£125,001-£250,000 - two percent
£250,001-£925,000 - five percent
£925,000-£1,500,000 - 10 percent
£1,500,000 and above - 12 percent.
READ MORE: Stamp duty holiday was ‘enticing’ but expert claims buyers lost money

House prices 2021: Estate agency
House prices 2021: Estate agency

House prices 2021: How have changes to Stamp Duty impacted the property sector? (Image: GETTY)
House prices 2021: Properties

House prices 2021: Properties

The agency said the number of property exchanges during the first week of July was 60 percent below the five-year average for this time of year.

The property firm said this was a direct result of buyers scrambling to complete property deals before the end of June.

A buying frenzy began in the wake of the stamp duty holiday as buyers sought to purchase homes with more green space.

House prices 2021: Family

House prices 2021: Family

House prices 2021: House sales dropped by more than half in the first week of July (Image: GETTY)
Will Rhind, head of mortgage advice at Habito told “The property market was hugely bolstered by the relief brought in July 2020 which was initially intended to end this March.

“Since last summer, we’ve seen several months of record levels of property transactions as demand outstripped supply.

“The three-month extension to the relief - to the end of June - was projected to benefit over 100,000 additional property buyers.

“However, the level of demand has caused delays, and there will be homeowners who still miss out on the full relief due to circumstances outside of their control.”

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House prices 2021: The property market was brought much relief by the Stamp Duty holiday (Image: GETTY)

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Now the stamp duty tax relief is being tapered down and will come to an end completely at the end of September, the market is already showing signs of change.

House prices climbed at the fastest pace in almost 17 years in June according to building society Nationwide, with the average property 13.4 percent more expensive than a year before.

Suman Dally, head of conveyancing at UK law firm Shoosmiths told “There is no doubt that the Chancellor’s stimulus to the wavering housing market back in July 2020 had precisely the effect intended, to further fuel rising demand. But that demand outpaced supply and led to above inflation house price increases.

“In many cases, these increases have eaten into, and entirely consumed, the tax saving that was intended.

“With volumes being compressed into the window of opportunity it is possible that the market may soften and possibly even undergo some price correction as the relief window closes.

“In that case, buyers may then seek to re-negotiate prices with their sellers.”

She added: “Certainly if the reduction and end of the relief means the end of the current frenzied pace of transactions that will be welcomed by conveyancers who have been heroically working to fulfil their clients’ ambitions.

“However, whilst the supply of property remains low, combined with low-interest rates, the Government’s desire to manage inflation and many would-be purchasers having substantial savings pots through Covid constraints on their usual spending behaviours, we believe that the property market will continue to remain strong for the future.”

House prices 2021: Couple

House prices 2021: House prices jumped by 13.4 percent in June 2021 (Image: GETTY)
House prices 2021: Couple

Russell Galley, managing director of Halifax, said: “The power of home movers to drive the market won't fade entirely as the economy recovers.”

Demand remains particularly high among buyers seeking larger family homes - with detached property climbing faster than any other type during the past 12 months.

Detached homes now cost on average more than half a million pounds, £200,000 more expensive than the typical semi-detached house.

Speaking about the attraction to these property types, Mr Rhind told “With many city-based firms confirming a flexible return to offices from July, the demand for larger homes with offices and gardens could continue to drive the market in commuter towns.

“So, with demand staying high and supply increasing, it’s likely the housing market and prices will remain very strong, though not quite at the frantic level we saw from November 2020 to March 2021.”

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