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UK House Sales Tumble in July after Stamp Duty Holiday Deadline
House sales tumbled by almost two-thirds in July after tens of thousands of homebuyers rushed to complete their purchases in order to beat Rishi Sunak’s end-of-June stamp duty holiday deadline. Following a record surge in activity in June, when 213,370 UK homes change
BY
Realty Plus
Published - Thursday, 26 Aug, 2021
House sales tumbled by almost two-thirds in July after tens of thousands of homebuyers rushed to complete their purchases in order to beat Rishi Sunak’s end-of-June stamp duty holiday deadline. Following a record surge in activity in June, when 213,370 UK homes changed hands, transactions slumped 62% to 82,110 in July according to official data, after the government scaled back its tax break for buyers in England and Northern Ireland.
HM Revenue and Customs – which published the new data – said it showed that homebuyers were “completing property transactions earlier to take advantage of government housing market policies”.
Until 30 June, the first £500,000 spent on a property was tax-free, which meant a saving for a buyer of up to £15,000. However, Sarah Coles, a personal finance analyst at the investment firm Hargreaves Lansdown, said the tax break had a “powerful psychological impact … which went way beyond the actual cash buyers could save”.
A £3.8bn stamp duty holiday was announced by Sunak in July 2020 to ward off a collapse in the housing market during the first Covid lockdown. It was due to end on 31 March this year but, a few weeks prior to that, it was extended to the end of June.
On 1 July the tax break was scaled back, with the threshold at which the tax on property purchases begins falling to £250,000. This so-called “nil rate band” will return to its pre-pandemic level of £125,000 on 1 October.
The stamp duty holiday has been credited with fuelling a mini boom in the property market and pushing up prices. Last week, figures from the Office for National Statistics covering the period to 30 June showed house prices rising at their fastest rate in almost 17 years. However, a number of other factors have also contributed to the stronger-than-expected house price growth during the pandemic. These include new government guarantees for mortgages, and a “race for space” with many homebuyers prioritising properties with bigger gardens and more room for working from home.
Despite the sizeable drop-off in sales in July, the HMRC data showed that transactions were still 1.8% higher than in July last year, when activity was still affected by the near-complete closure of the market for several months. Property market experts said that while activity had passed its peak after the end of the full tax break, the pandemic and growth of home working continued to drive strong demand as buyers seek new properties to fit their changing lifestyles.
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