Was it ‘worthwhile’? Homebuyers face 327% increase in stamp duty as final deadline looms

The estate and lettings company analysed the average cost of stamp duty before Chancellor Rishi Sunak introduced the holiday in July 2020 and how this compared to the tax owed on the current purchase of a property. In June 2020, the average house price in England was £250,739, which meant buyers paid £2,537 in stamp duty. The average house price has since climbed by 8.1 percent to £270,973 – that’s a £20,234 increase in the cost of a home.

The capital has seen one of the largest increases in pounds and pence when it comes to stamp duty with an increase of £735.

However, it actually equates to just a five percent increase in the cost of stamp duty land tax.

In the North East, a £305 increase in the cost of stamp duty equates to a 327 percent increase on the cost previously faced by the average homebuyer.

The North West (37 percent increase), South West (30 percent increase), Yorkshire and the Humber (29 percent increase) and South East (26 percent increase) are also home to some of the biggest percentage increases in stamp duty costs.

The South East has seen a large monetary increase with the average stamp duty bill climbing from £6,101 in June 2020 to £7,714 now – a jump of £1,613.

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The East Midlands is the only other region to see an increase of more than £1,000 in stamp duty costs as a result of the holiday.

The average homebuyer was paying £4,589 prior to the holiday but it will now face a cost of £5,604 when it ends – a jump of £1,015.

Managing Director of Barrows and Forrester, James Forrester, said the stamp duty holiday may have seemed like a great idea when it first launched but many buyers may be wondering if it was worth it.

He said: “Much like a Wednesday night out on the town, the stamp duty holiday may have seemed like a great idea for homebuyers when it first launched.

“However, now that the chance of a saving has all but vanished, many will be left wondering if it was really worthwhile.

“It certainly worked wonders in spurring an uplift in buyer demand but the real legacy of the stamp duty holiday will be ongoing market delays and an even larger hurdle to overcome where the affordability of climbing the ladder is concerned.

“We’ve seen time and time again how these buyer focussed Government initiatives lead to higher house prices while failing to address the issue of supply and, in doing so, more and more buyers will fail to realise their aspirations of homeownership.”

The original stamp duty holiday was due to end on March 31, 2021.

However, Mr Sunak decided to extend the deadline until October, opting for a more phased approach.

From March 31 to June 30, 2021, buyers paid no tax on the first £500,000 on a property in England and Wales.

Buyers could save up to £15,000 in tax thanks to the holiday.

From July 1 to September 30, the threshold was tapered down to £250,000 which means no stamp duty is paid on a residential property bought for up to this amount.

October 1 will see the nil rate band return to the standard amount of £125,000.

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