Stamp Duty Holiday – rush to buy?

Is now a better time to invest to take advantage of the Stamp Duty Holiday? Just to reiterate some facts:

  • No stamp duty was payable up until the purchase property price is atleast £125 000
  • 3% additional stamp duty is still payable (if you already own a property) for any residential purchase over the £40 000 threshold. Remember if you are buying a block of flats, you can get each flat valued individually (For HMRC purposes) and may be able to get values all below the £40 000 threshold and hence avoid paying the additional stamp duty
  • Stamp duty holiday applies to all residential properties upto the value of £500 000 and this is for all completions taking place before the 31st of March 2021 (that’s only 35 weeks away). Remember lenders are operating in slower time scales then previous and Conveyancers are building up back logs, so this will add to already quite long time scales on purchases.

Average prices by property type

So what should you consider if you are exploring options for your residential property?

  •  if you have been considering a property purchase, now may be a good time, as the price you will pay for your residential property will be higher then your average buy to let purchase. Say for example a property purchase price of £310 000, you will save £5500 under the current Stamp Duty Holiday terms.
  •  will property prices increase? We use buyer enquiries as a Key Indicator of local market demand, in the month of July we experienced a 19% increase (year on year) in buyer enquiries, which was of course helped by the announcement of the Stamp Duty Holiday (SDH). Property prices have increased 2.1% (nationally) since March, however it is hard to determine what the percentage increase would have been without the announcement of the Stamp Duty Holiday. I feel prices will be propped up and if you end up paying £5000 extra (due to increased demand because of the SDH) on your £310 000 residential property purchase, in effect you are no better off!
  • Lending – we are hearing lenders are being a lot more cautious and we feel this trend will continue and lenders will continue to monitor economic factors and availability of products may reduce towards the end of the year
  • Wait until 1st of April 2021? It is hard to look at historic records to attempt to forecast how the market will react post the end of the SDH. However, we know many sales will take place before the deadline and it is fair to consider a slump in demand. However, many properties will come on market now as homeowners need to sell as they look to purchase their next home and take advantage of the SDH. Supply will reduce post the end of the SDH. Covid-19, a second wave? A slump in business confidence, unemployment spikes post end of Furlough Scheme, will all lead to adverse effects on the overall economy. To summarise, factors to consider which will affect property prices, a reduction in supply of residential properties, drop in prices due to reduced demand, a weak economic forecast leading to property prices falling. In my opinion if you were looking to move already you should definitely take advantage of the stamp duty holiday and I would recommend you have agreed a purchase within 12 weeks, if you need to sell to move, then look to get your property on the market and speak to a broker for mortgage and credit options available to yourself. If you didn’t have intention to move in short term, I would ride out the next few months (especially considering all the uncertainty stemming from the current pandemic), see how the market reacts and wait for your dream home post the end of the SDH.

To get a free online valuation on your property, please follow link below:

We work with Connect mortgages an independent panel covering all of the market, to see your mortgage options available for yourself and to save money on your current mortgages, let me know and I will put you in touch.

Below is a simple table I have done showing Stamp Duty that will be liable Residential Property Purchases during the Stamp Duty Holiday period:

Purchase Price Rate on Main Residence Rate for additional Properties (EG buy to let properties)
Up to £500 000 0% 3%
£500 001 – £925 000 5% 8%
£925 001 – £1 500 000 10% 13%

Below is a snapshot to give you an idea of property price movements:

Key housing market indicesStamp Duty Holiday factors to consider when investing in Buy to Let in local property market:

  • Additional Stamp Duty (when you already have a property) still applies on residential property purchases at a rate of 3%
  • Blackpool average property sale price is just £133 000, remember the threshold for Stamp Duty was upto £125 000, so even prior to stamp duty holiday you would have only paid 2% over that amount (upto property next threshold of £250 000) so in this example if you were purchasing a property at £133 000 your stamp duty in normal circumstances would have only been £160!
  • Buy to Let property purchases tend to be in the lower average, so little impact (from SDH) on your future buy to let investments but if you were considering to purchase a higher value property especially with rising demand for AirBNB and HMO properties (and high yielding cash benefits), now would make sense!
  • Rental market demand is getting stronger, and with property cycles it is clear when there is uncertainty in the economy that first time buyer demand tends to drop and people tend to opt for rental properties. I am also a big adovate, with changes in lifestyle, shift away from lifetime employment with one company, working from home increasing, along with many other factors I feel UKs private rental market will continue to grow and rental will become a preferred option for many and the stigma attached to renting will continue to reduce

My recommendation grow your portfolio! The one piece of advice I will give, is have a plan and a clear strategy for your property business! It is a business, establish routines, have monthly meetings (even just with yourself) to review performance, are you moving forwards towards achieving your goals.

For me I established a why when I started property investing, which was by year X I want to be earning X amount net, with X number of hours of my time so me and my family can live the life we want from the income my property portfolio is generating. I review the performance of my portfolio monthly and try and make strategic decisions in regards to my next investments, improvements and property strategy (ie commercial, convert to serviced accommodation unit etc)

If you are looking to invest reach out to me and I will help 🙂

My investment of the week, is a property we are marketing in St Annes (with tenant in situ( on a very popular road (Kilnhouse Lane), we also currently manage the current tenancy.

  • Rented at £750, scope to increase
  • Capital growth opportunities in St Annes are higher opposed to that of central Blackpool
  • High demand rental property (4 bed, great area, not many competing rental properties)
  • Asking price of £159 000



Hamza Anwar

Local Letting Expert


2 thoughts on “Stamp Duty Holiday – rush to buy?

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