There has been a substantial impact on the housing market due to COVID-19 and the restrictions during lockdown, since april there has been multiple calls for a stamp duty holiday to try help boost the the housing market. Now the estate agency branches have all started opening up which is a welcomed development, allowing house sales to proceed, it now only makes sense that some kind of tax cut or stamp duty holiday could help the UK economy and housing market.
During the recession in late 1991 to 1992 the stamp duty holiday was introduced. The stamp duty rate was just 1%. The threshold for paying stamp duty was temporarily raised from £30,000 to £250,000. The average price for a UK home was just over £50,000 average. In 1992 despite the intervention he housing transactions were still lower than in 1991, although the house prices still fell. In 2008 and 2009 the UK had a financial crisis so another stamp duty holiday was introduced. The stamp duty holiday in 2008 and 2009 raised the lowest threshold for paying 1% rate of stamp duty from £125,000 to £175,000. The average price of a UK home was just under £175,000.
The current stamp duty regime is, in 2014 the method of calculating stamp duty changed also the rates at which this tax is changed. This effectively cut the tax bill on homes worth up to £940,000, but charged more for other expensive properties over that range. In 2009 the most expensive stamp duty band was 4%. This in now 12%, rising to 15% for some home buyers and 17% for overseas buyers purchasing in England from next year (2021). In 2017 first time buyers purchasing a home in England or Northern Ireland up to £300,000 have been exempt from this property tax since 2017. In Scotland first time buyers pay no stamp duty on purchases on properties with a value of up to £175,000, while in Wales the nil-rate band for all buyers was set at £180,000 in 2018.
If we do get the go ahead for the stamp duty holiday it may work by giving potential buyers a tax break and will encourage them to move home. A stamp duty holiday may not only be about helping people achieve their dream of getting a home, it’s also about getting the housing market back on its feet and getting the economy going again. Due to the previous holiday stamp duty it shows with great evidence that it can boost house sales overall.
Let see if the UK government announces anytime soon that a stamp duty holiday is coming.