Home buyers are racing to complete deals before a stamp duty holiday is tapered from Thursday, potentially saving themselves thousands of pounds if they can meet the deadline.
From Thursday, the “nil rate” stamp duty threshold in England and Northern Ireland, which has been temporarily set at £500,000 since July last year, will halve to £250,000.
From October 1, the threshold will revert back to its normal level of £125,000.
The stamp duty holiday was extended after originally being due to end in March.
The Law Society has said solicitors “have been working 24/7” to meet their clients’ wishes.
Removals firm AnyVan reported a 200% increase in demand for removals vans in June, compared with June 2020. On average, people are moving 50 miles, with a growing proportion of moves being from cities to rural areas, it said.
Lawrence Bowles, residential research analyst at estate agents Savills, said: “Some of the urgency is expected to come out of the market over coming months although the tapered stamp duty relief from July to September will support activity in more affordable parts of the market such as the Midlands and North of England.
“Activity in the prime markets remains strong, however, with the number of sales agreed above £1 million running at 50% above the June 2017-19 average.
“At these higher price points, the stamp holiday saving is a much lower proportion of the purchase price. We’d therefore expect that strong level of activity to continue over the next few months as we work through substantial pent-up demand.
“Our recent buyer survey suggests that 85% intend to continue with their purchases even if they miss the June 30 deadline, while 10% say they might try to renegotiate on price. Just 5% say they will consider withdrawing.”
Some buyers have agreed price cuts in order to keep the whole chain of sales moving.
With house prices surging by 13.4% annually in June, according to figures from Nationwide Building Society, buyers could end up paying significantly more if they drop out of a chain and have to start their house search again, as well as losing money they have already spent on the transaction.
In addition, with a lack of stock in many areas they may struggle to find another suitable property.
Why is the housing market so busy right now?
— Rightmove (@rightmove) June 22, 2021
They could also miss out on the stamp duty holiday completely by dropping out and starting again, as sales are currently taking around four months to complete, according to Rightmove.
Rightmove has calculated that nearly £16,000 has been added to the price tag on a home across Britain since the stamp duty holiday was announced in July 2020. This is more than the potential stamp duty saving of up to £15,000 that a home buyer could make if completing a property purchase before Thursday.
The stamp duty holiday is not the only driver of the current market.
Some buyers had to put off plans to move in 2020 due to the coronavirus pandemic. Many are also looking to make lifestyle changes and no longer need to live as close to their workplace as employers put in place more flexible policies around home working.
Grainne Gilmore, head of research at Zoopla, said: “The busy market is being driven by a once-in-a-generation re-assessment of home as a result of the pandemic.
“This has led hundreds of thousands of households to reflect on how and where they want to live – and they are making a move as a result, with family houses most in demand.
“This trend has been certainly boosted by the stamp duty savings on offer due to the stamp duty holiday, but levels of sales activity in recent months have remained high, with many of these buyers now only expecting the lower, tapered, stamp duty exemption.”
A spokesman for HSBC UK said: “We have had our eyes on the stamp duty relief deadline for a while in order to manage our resources and satisfy customer demand.
“Our teams have been working around the clock to make sure that customers buying their first home or moving house are completed without delay or drama, and the money has been sent to conveyancers for them to complete the transaction. It is an exciting time for those who are moving, and we wish them all well.”
Some experts said the phasing out of the stamp duty holiday will leave “healthy” levels of housing market activity remaining.
Tom Bill, head of UK residential research at Knight Frank, said: “The stamp duty holiday hasn’t just squeezed transactions into artificially short periods of time, it has also put people off entering the market.
“A tax deadline there is no guarantee of meeting, together with stories of sealed bids, over-worked conveyancing solicitors and a shortage of removals vans will have deterred some – exacerbating already-low levels of supply and putting upwards pressure on prices.
“There will be a financial hit from ending the holiday but the wider point is that it signals a return to normality.
“Indeed, the second half of this year should see healthy levels of activity in the UK housing market. There is frustrated demand in the system, new supply is starting to pick up and the labour market is stronger than most economists predicted six months ago.”