The Stamp Duty holiday ended on 30 September, which means the Stamp Duty threshold has now returned to its pre-pandemic levels. But what does this mean for you if you’re planning to buy? Should you start house hunting now? Or is it better to give it a few months for the market to stabilise? Here’s a look at your options.
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What is Stamp Duty?
Stamp Duty is a type of tax. You pay it on properties above a certain value in England and Northern Ireland. From 1 October 2021, you’ll pay Stamp Duty on properties purchased for £125,001 or more. How much you pay depends on the property price.
There are similar property taxes in Scotland and Wales, although the thresholds are different.
What was the Stamp Duty holiday?
In July 2020, the UK government raised the threshold for pa Stamp Duty.
- Between 8 July 2020 and 30 June 2021, there was no Stamp Duty to pay on properties under £500,000.
- From 1 July 2021 to 30 September 2021, buyers didn’t pay Stamp Duty on properties purchased for £250,000 or less.
The point of the holiday was to encourage buyers and stimulate the housing market during the pandemic. However, as the country slowly recovers, the Stamp Duty threshold has now returned to its pre-pandemic level. The upshot? As before the pandemic, if you buy a house worth £125,001 or more, you’ll pay Stamp Duty.
So, should you be buying a house right now? Or is it worth holding off to see what happens to house prices in 2022?
What’s happening with house prices right now?
Unsurprisingly, the Stamp Duty holiday spurred on the UK housing market, and buyers scrambled to find their perfect home before 1 October. However, just because Stamp Duty is back in force, it doesn’t mean we’ll suddenly see a drop in house prices this autumn.
Why? Because there’s still high demand for property – the market hasn’t changed dramatically overnight. Prices are likely to stay elevated in the short term while sellers try to capitalise on buyers hoping for a pre-Christmas move.
What’s more, there’s still a relatively low supply of properties on the market compared to demand, according to Zoopla. Essentially, then, it’s a buyer’s market, with multiple buyers bidding on the same properties – for the time being, anyway.
Should I wait until 2022 to buy a house?
It could be a good idea, according to Ross Counsell, a chartered surveyor and director at GoodMove. But why hold on for a few more months? Well, there are a few reasons, but the biggest is supply and demand.
Most buyers who really wanted to move before the year’s end bought a property during the Stamp Duty holiday. So, we can expect to see fewer people competing for the same properties over the coming months.
The result? Lower demand means sellers will (eventually) have to lower their house prices to entice buyers back into the marketplace. This means you could find your perfect property cheaper in a few months’ time.
Here’s what Ross Counsell had to say on the matter: “We advise any potential buyers to hold off until the new year before making a purchase, in order to allow time for the housing market to stabilise post-Stamp Duty holiday, thus making it easier for buyers to navigate.”
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Conclusion
The upshot? Unless there’s a specific reason why you must buy a house right now, it might be wise to sit tight until early 2022. It could pay to wait and see how the market adjusts following the Stamp Duty holiday.
Whenever you move house, don’t feel pressured into buying a new property – especially if you’re a first-time buyer. Get financial advice if you’re not sure you can afford a mortgage and don’t commit to a property you can’t afford.
Once you’re ready to move, don’t forget to take out home insurance. Check out price comparison sites like Confused.com for a range of deals.