As the first stamp duty holiday deadline approaches, homebuyers are desperately trying to conclude business to save a chunk of money in land tax fees.
The stamp duty holiday, first introduced in June 2020 to stimulate the property market, has seen a surge of people looking to make a property move amid the Covid pandemic.
Demand for houses has been sky high as people re-evaluate their home needs, with a race for more space and outside areas such as gardens topping the wanted charts.
This demand coupled with the stamp duty holiday have seen house prices increase at an alarming rate, leading to many wondering what will happen once the tax break winds down.
Let's ask the experts what will happen to house prices after the stamp duty holiday ends…
What is the stamp duty holiday?
The government's stamp duty holiday gives would-be homebuyers the chance to save on the one-off land tax fee when purchasing a new property.
It does this by suspending the cost of stamp duty on the first £500,000 of all property sales, upping the threshold from £125,000 before the incentive was introduced.
When will the stamp duty holiday end?
In England and Northern Ireland, the stamp duty holiday extension tapers down from 30 June 2021 when the threshold for tax to be paid on a property reduces from £500k to £250k.
It will remain at £250k for three months until 30 September 2021 and only applies to completed property purchases before this date, before normal rates return from 1 October 2021.
The end of June also signals the end of the land transaction tax break on the first £250k on a property for people in Wales, with normal rates returning from 1 July 2021.
Normal land and buildings transaction tax rates have been in place in Scotland since 1 April 2021, after ministers chose to end the holiday period before the rest of the UK.
What will happen to house prices after the stamp duty holiday ends?
Latest figures from the Nationwide House Price Index show a 13.4% annual rise in property prices across England - the highest rate of growth since 2014.
Colby Short, founder and CEO of comparison website GetAgent.co.uk, said an imbalance between supply and demand will remain after the stamp duty holiday ends.
He said: "Properties are going under offer at an alarming pace at the moment and buyers continue to swarm the market despite the dwindling hopes of a stamp duty reprieve. There also remains a severe shortage of stock to meet this demand and so sellers are achieving a very good price for their property, often at, or in excess of the original asking price.
"While a reduction in buyer demand is expected towards the back end of this year, the scales will remain firmly tipped in favour of sellers due to the imbalance between supply and demand and so we should see a buoyant level of property price appreciation remain for the duration of the year."
Will the housing market slow down?
As well as an increase in property prices, there has been an increase in transactions as homebuyers look to get in before the stamp duty holiday ends.
But director of estate agents Benham and Reeves, Marc von Grundherr, said the housing market of summer 2021 is different to the one in the first quarter of the year.
He said: "We’re currently seeing huge rates of house price growth not seen since some time before the last property market crash. There’s no end in sight where this current market performance is concerned, despite some having predicted a market slump on and off since the pandemic first started.
"It’s important to remember that while the market did show signs of slowing down as we approached the original stamp duty deadline, we’re now looking at a very different market altogether. People are returning to work and life is gradually returning to a greater sense of normality and so the stimulation of a stamp duty saving is no longer required in order to maintain market activity."
Are all property experts in agreement?
In short, no. There are differing opinions to what the wind down of the stamp duty holiday will do to house prices and the volume of transactions seen currently.
Matthew Cooper, founder and managing director of YesHomebuyers, believes there will be a decline in property prices after the stamp duty holiday comes to an end in 2021.
He said: “It’s crunch time for the UK market and we can expect to see a far less positive outlook from here on out where house price appreciation is concerned.
"For far too long, homebuyers have been borrowing beyond their means and offering above the odds in a desperate scramble to secure a stamp duty holiday saving. Now that this is starting to slip through their fingers we will see a reduction in transaction levels and the inevitable decline in property prices that will soon follow."