House Prices Boom with the Extension of the Stamp Duty

According to the analysis of Estate agent, Barrow and Forrester, a considerable boom in house prices caused by the stamp duty holiday have seen an increase of just over £20,000 to the average value of homes in England.

The announcement of the Stamp Duty being extended until 30 June 2021, was a sigh of relief for people buying and selling homes. Last summer, the government temporarily increased the threshold at which tax is paid on the sale of properties valued at £500,000 and below.

After the deadline, the rate of stamp duty will start at £250,000 until 30 September, where it will return to the normal threshold of £125,000.

The extension means anyone completing a purchase on their main residence valued up to £500,000 before 30 June will not pay any stamp duty.

Since the tax holiday, house prices have increased on average 0.84% per month across England, where the current average house price sits at around £260,000. Should the growth continue for the rest of the year, the average house price in England could be just over £290,000.

Some areas of England have seen a better result than others. The South-East, for instance, have seen house prices increase at 0.87% per month since July, putting the expected house price increase of over £30,000 by the end of the year. South West is expected to see a price climb of a further £26,000. London on the other hand has seen the lowest monthly rate of 0.42%. The highest average monthly increase has been welcomed in the North West, at 1.09%.

Our professional opinion

Since the introduction of the stamp duty holiday, there has been a significant impact on the property market. Buying a property has been more accessible with the additional Help-to-Buy Scheme available to first-time buyers. However, this year, there have seen changes where caps have been put in place on the property’s value depending on the region. This might explain the difference in the rate of house prices increasing monthly per region, especially where London is concerned. The property cap on house prices in London for Help-to-Buy is £600,000, £100k above the stamp the duty allowance.

With the Stamp Duty Holiday pushing up house prices, may see some properties fall out of the threshold for Help-to-Buy. This will result in some first-time buyers having to downsize on what they were originally looking for. We, therefore, recommend keeping this factor in mind when considering buying a property and finding out the price cap that applies to the region.

Emilia Borys – Trainee Solicitor

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