Stamp Duty Holiday: An Alternative Take
The Stamp Duty Holiday has been a hot topic for the past ten months, but real estate consultancy Knight Frank has suggested the effect on the market has been more limited than we previously thought.
Knight Frank cites data from OnTheMarket that shows a 30%rise in properties going under offer in England and Wales in March, compared to the same month in 2020.
While the bracket of properties going under offer between£500,000 to £1m increased by 57%, and 40% for properties priced between £1m and£1.5m, there was only a 26% increase in the sub-£500,000 bracket, despite this creating the biggest saving and also appealing to the section of the market most likely to be incentivised to take advantage of the scheme, with KnightFrank noting that ‘although the tax-free threshold is £500,000, it is reasonable to assume it will be an important consideration for buyers up to£1m.”
Price flexibility, according to Knight Frank, is another factor in pushing through these sales, and one that suggests the end of the Stamp Duty Holiday won’t lead to an abrupt dip in the market.
There are several caveats with which you can read into thistake, however.
Firstly, the bracket that Knight Frank focuses on – the sub-£500,000 bracket – assumes that savings of £15,000 would not be a major factor in sales of properties in the higher brackets (despite them acknowledging it being a consideration for buyers up to £1m). It could be argued that only paying £5,000versus £20,000 enables more people to enter to the £500,000+ bracket.
Secondly, the dates from which the figures are taken are perhaps not the truest representation of last year’s market compared to this year’s. March last year could be read as something of an anomaly, so immediate was the impact of the pandemic, while the majority of people capitalising on the Stamp Duty Holiday will have likely doneso before this March.
Thirdly, in 2018, Zoopla reported that 768,553 homes in Britain were valued at £1m and above. According to the Office for National Statistics (ONS),the average house price in the UK is £268,000. This highlights the comparatively low amount of homes in the £1m+bracket, and therefore how a relatively small increase in sales can actually return a higher percentage on paper, than the lower price brackets.