A leading agency claims the stamp duty holiday has actually had a minimal impact in the mainstream market, despite many suggestions to the contrary.
Using OnTheMarket data, Knight Frank says that last month - March - there was a 30 per cent rise in the number of properties going under offer in England and Wales compared to the same month last year.
“There was some effect from Covid-19 towards the tail end of March last year, but the breakdown by price band is revealing [about the impact on the market of the holiday]” says Knight Frank.
That breakdown was:
- The £500,000 to £1m price bracket experienced a 57 per cent followed by £1m to £1.5m rise of 40 per cent;
- Below £500,000, the band in which the stamp duty holiday creates the largest saving, the increase was just 26 per cent;
- Above £1.5m there was a 10 per cent rise in the number of properties going under offer.
Knight Frank says: “The stamp duty holiday has been an important motivating factor for buyers but the figures show that it hasn’t boosted activity to a greater extent in lower-value markets. The maximum saving is £15,000 and although the tax-free threshold is £500,000, it is reasonable to assume it will be an important consideration for buyers up to £1m.”
Exchange data also shows the limited extent to which the holiday has distorted the market, according to the agency’s interpretation.
The agency states: “The number of exchanges above £1.5m increased by 56 per cent in March versus the five-year average. Between £1m and £1.5m the jump was 89 per cent and there was an increase of 64 per cent between £500,000 and £1m.”
So what does this suggest for the future, before the holiday ends for good at the end of September?
“With the holiday in place for nine months [already] buyers and sellers have increasingly factored in the need for price flexibility. All of which suggests the brakes will be dabbed rather than slammed on when the stamp duty holiday eventually ends.”