An End to the Stamp Duty Holiday

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Posted by Andrew Parker

The so-called Stamp Duty holiday is due to come to an end. In order to avoid paying increased rates, first-time buyers are rushing to beat the deadline on buying new properties by March, when new rates will start. As a result of this stampede, the number of valuations performed on houses made available for sale has seen a 43% year-on-year increase for January. Many prospective homeowners are consulting mortgage calculators in anticipation that they can buy a home before the rise in Stamp Duty kicks in.

The rise in valuations is down to a flood of first-time buyers looking for a new home within their price range. A 52% year-on-year rise in valuations done for first time buyers happened in January. However, if you take first-time buyers out of the equation, valuations fell by around 2% compared to December 2011 Remortgage valuations were also very popular last month. Around 26% of all valuations were for remortgaging, and this is largely down to the historically low mortgage rates.

The fact that remortgaging and wanting to buy houses before the end of the Stamp Duty holiday hints that people wanting to buy new homes are intent on saving as much money as they can, and that the housing market remains in a parlous state. Come the end of March, it’s possible that first-time buyers who’ve missed the boat will find it even harder than before to get onto the property ladder for the first time.

There is a way in which first-time buyers can buy a home before the end of the Stamp duty without having to incur higher costs. If they need to borrow to pay their deposit, many lenders are offering cheap fixed rates, which means they won’t have to pay extra when they have to pay the loan back. Doing this will provide financial security for the foreseeable future, whereas others in a similar situation may struggle.

The Stamp Duty holiday was created by the government in an attempt to help out first-time buyers, while at the same time providing a boost to the stricken property sector and people looking to sell their homes. As the flood of activity in valuations shows, it seems to be having the desired effect.

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