People buying a home with a price tag of up to £500,000 have saved an average of £4,660 each as a result of the stamp duty holiday.
Nearly 750,000 homebuyers in England are set to benefit from the stamp duty holiday, collectively saving almost £5bn.
A total of 600,000 buyers who agreed a sale from May 2020 onwards will not pay any stamp duty at all as a result of the stamp duty holiday.
They will save an average of £4,660 each, or £2.8bn collectively, assuming they complete before the 31 March deadline.
A further 140,500 people buying homes costing more than £500,000 will benefit from a reduction in the amount of stamp duty they pay, according to our analysis.
And they will save £15,000 each, or £2.1bn in total, although they will still have to pay the tax on the portion of their property’s value above £500,000.
Why is this happening?
The stamp duty holiday on homes costing up to £500,000 was launched by the Chancellor in July last year to help boost the housing market after the first national lockdown was lifted.
The tax break, combined with many people carrying out a once-in-a-lifetime re-assessment of their housing needs, triggered a boom in property sales, with 11% more homes changing hands in 2020 than in 2019.
Who does it affect?
Stamp duty is paid on completion - in other words, when ownership is legally transferred.
So the stamp duty holiday not only benefitted people who were already in the process of buying a home when the tax break was announced, it has also acted as an incentive for other potential buyers to move home before 31 March deadline.
The spike in buyer appetite triggered in part by the stamp duty holiday has encouraged some people to put their homes up for sale - many buyers are sellers, too.
This combination of sustained buyer demand and more homes on the market has boosted overall activity levels.
Can I still benefit from the stamp duty holiday?
Under normal circumstances, anyone who agreed a sale during any calendar year would expect to have completed on it by the end of March the following year.
But a ‘bulge’ in the sales pipeline has meant that the average time it takes from a sale being agreed to legal completion is now approaching four months.
As a result, up to 70,000 property sales that were agreed in 2020 are at risk of missing the 31 March deadline to benefit from the stamp duty holiday. Calls are now growing for the stamp duty holiday to be extended.
What can I do to speed up my transaction?
If you are in the process of buying a home, there are a number of steps you can take to help the conveyancing process go as smoothly as possible.
Make sure you have all the relevant paperwork you will need to hand and respond to any requests for additional information as quickly as possible.
If you need to sign documents and return them to your solicitor, consider delivering them by hand, rather than relying on the post or even a courier.
Maintain a high level of communication with your solicitor and estate agent to try to keep the process on track. It can be a good idea to agree to have a weekly update from all parties.
Finally, be prepared to be flexible. If you are also selling a property and an issue is uncovered in the buyer’s survey, you may have to be prepared to drop your agreed sale price slightly to keep things moving along.
Richard Donnell, research director at Zoopla, said: “Demand for housing has started 2021 as strongly as last year with limited evidence new buyers are being put off by the proposed ending of the stamp holiday.
“The pandemic and lockdowns continue to stimulate households to move home and this will help soften the short-term impact when the stamp duty holiday finally ends.”
Top three takeaways
- A total of 600,000 buyers will not pay any stamp duty at all as a result of the tax break, saving an average of £4,660 each
- A further 140,500 people buying homes costing more than £500,000 will see a reduction in the amount of stamp duty they pay, saving them £15,000 each
- An estimated 70,000 sales that were agreed in 2020 are at risk of not completing in time to benefit from the stamp duty holiday.
You might also be interested in…
- Stamp duty holiday: the key timings you need to know
- What’s in store for the housing market in 2021?