Stamp Duty is a form of tax which is paid when you purchase property or land above a certain price threshold in England and Northern Ireland. The Office for Budget Responsibility said the level of house prices remains at 17 percent lower over the five-year forecast period, compared to March predictions. Express.co.uk speaks to property experts about what the end of the Stamp Duty holiday will mean for the property market and particularly house prices?
What is Stamp Duty?
Stamp Duty Land Tax is a lump-sum tax payment which is charged to anyone buying a property or land costing more than a set amount.
You encounter this tax when you buy a property or land.
The rate differs based on the price of the property, the type of property and the location.
In England and Northern Ireland, buyers pay Stamp Duty Land Tax, but in Scotland, it is Land and Buildings Transaction Tax, while in Wales buyers pay Land Transaction Tax.
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He added the coronavirus pandemic and Brexit outcome will likely have a large impact on the property market.
Mr Hemming said: “We’ve got both COVID and BREXIT to contend with here, so there’s a lot left to happen before the stamp duty holiday ends.
“Naturally, you would expect prices to fall slightly, but there seems to be so much pent up demand and a very British attitude of defiance, that a drop is beginning to look less and less likely.
“The ‘keep calm and carry on’ spirit appears to be alive and well.”
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Property expert David Price from 10ACIA Construction said there is a risk of zero growth with house prices after the Stamp Duty holiday comes to an end.
He told Express.co.uk: “If the government aren’t careful to massage the policy out, vs ending it on a cliff-edge (either “on”, or “off”) – we risk seeing house prices with zero growth, with the strong possibility of negative falling house prices.”
Mr Price added that the Government is likely to step in to avoid a property crash.
He said: “I believe the government will step in and adjust the way the stamp duty holiday is to come to an end.
“Currently, it’s too abrupt, and will largely undo the recovery work the tax holiday has given to the wider property market – which significantly contributes to the UK economy.
“Risking damage to this will want to be avoided at all costs by the government. Another reason, this is not 2008.
“The banks are now liquid, and finance is cheaper than it’s ever been. So borrowing, investment in business growth is hugely encouraged.
“What will happen, is a slow down of the market, due to the rush not being there to capitalise on the tax-saving – but people still need houses, more people will be getting divorced and separated due to lockdown, and we’re still miles off the mark from building enough houses – so the demand still outstrips the supply.
“If a correction in house pricing is to be seen by the market, this will only be back to a level of pre-lock down.”