Chancellor Rishi Sunak’s stamp duty holiday was initially set to last for just eight months. This deadline was then extended twice due to the unprecedented extent of the pandemic. In total, over 500,000 homes were purchased between July 8th 2020 and September 30th 2021, at a significantly reduced level of stamp duty or ultimately paying none at all.
The stamp duty holiday was set up to try and support the housing market, which inevitably would suffer just as it has in times gone by with difficult recessions. However, the Government didn’t predict a 70% rise in purchase numbers. The holiday was expected to encourage buyers and sellers, but it also created a sense of urgency that had unprecedented results creating a mini housing boom.
Over the stamp duty holiday the total SDLT (stamp duty land tax) receipts from residential homes was over £9.62 billion, which is just £1.05 billion shy of the past two years during in the same period. Savills Research estimates during the period:
“the receipts from properties worth over £1 million increased by 48 per cent (some £1.62 billion)”...
... to only 2.7% of purchases, they would have created more than 50% of the residential receipts for SDLT. The stamp duty holiday helped the property market and seemingly without a painful cost to the Treasury.
Property investors look set to do well but how about homeowners? Homeowners have benefitted immensely, saving a massive £6.4 billion during this period. This saving is nearly balanced equally by those who purchased homes over and those who purchased below £500k. The Treasury, although happy with the success of the stamp duty holiday and the strength of the UK property market, may look back with some raised eyebrows at the generous sum they gave away. It would be fair to estimate that a similar scheme may not be implemented on this scale again until the market at that time can be gauged in more detail.