Intense market activity driven largely by the stamp duty holiday has pushed nearly two million UK properties into a higher stamp duty bracket in a win for the Treasury.
Thanks to feverish market activity in the last 12 months, of all UK homes, 940,000 additional properties will now attract some level of stamp duty at five per cent, and an extra 130,000 will command some level of stamp duty at 10 per cent, according to figures from Zoopla.
The property website calculated the average stamp duty payable on homes that have moved up into the 10 per cent stamp duty band will be around £6,100 after the end of the tapered stamp duty holiday in September, while the additional cost for the average home that has moved up into the five per cent band will be around £725.
According to figures from Zoopla, the average UK house price has increased by £10,246 in the last 12 months, though Halifax reckons properties prices have gone up £20,000 since last April.
Tomorrow, the initial stamp duty holiday – allowing buyers to pay no stamp duty on properties worth up to £500,000 – comes to an end.
The end of the tax holiday is unlikely to result in a cliff edge, Zoopla said, as buyer demand is still up 55 per cent above levels recorded in 2019 while supply remains down, with the total stock of homes available to buy running 24 per cent below average levels last year.
Demand is expected to continue to be driven by newly announced flexible working policies, as buyers search for more space.
Zoopla head of research Grainne Gilmore said: “The stamp duty holiday boosted demand in the housing market, yet buyer demand remains elevated despite the initial holiday ending – signalling that the once-in-a-generation ‘reassessment of home’ has further to run this year.
“Demand may ease further as the reopening of the economy allows people to do more and travel more widely, but at the same time, the confirmation of working practices for office-based workers will lead to more homebuyers being able to push ahead with a move.
“The total stock of homes for sale continues to run well below historical norms, and this will underpin pricing. At the same time, it may also constrain potential activity, especially for buyers looking for family houses. Even so, we forecast that this year will be one of the busiest for the housing market since the global financial crisis – with 1.5 million residential transactions.”
A Treasury spokesperson said: “The temporary stamp duty cut is helping to protect hundreds of thousands of jobs which rely on the property market by stimulating house moves.
“Official HMRC figures show it’s working, with transactions up 138 per cent last month compared with June 2020.”