After a welcome holiday on paying stamp duty, introduced when we came out of the first major Covid lockdown last summer, it has now returned to its regular pre-pandemic levels here in Northern Ireland and England. I am sure if you moved house during this stamp duty holiday you were very grateful for this cut, and in fact there were record sales during this period which showed the popularity of this strategy.
Differing Views On Whether It Was A Good Or Bad Move
However there are differing views on whether it has been good for the housing market and the country as a whole. Mark Bogard, chief executive of The Family Building Society, speaking to BBC News, is very positive over the stamp duty cut and believes it should continue. He said:
“Stamp duty is a very significant tax, but it is extremely easy to avoid by just not moving home,
“People have generally been living in the same home for longer than in the past. That is especially true of potential ‘downsizers’, who have been put off moving because they would normally have to pay stamp duty,”
He believes the cut created a real economic stimulus: “People spend significant amounts of money sprucing-up a property before they sell it, money is then spent during the buying and selling process, and then buyers spend again to make changes when they move in,
“I can’t see any argument for not continuing with [the stamp duty holiday],”
No Need To Have Extended The Tax Break After March
However Lindsay Judge, who is research director for the Resolution Foundation, believes that the stamp duty tax break, although welcome at the time, should not have been extended beyond March of this year. In the same article she said:
“The government didn’t turn off the tap when it became apparent that it inflated house prices,
“The reason why it was largely unnecessary was because there have been other stimulus effects in the housing market.”
The article goes on to say:
`She says that many people who continued their jobs unaffected by the pandemic built-up large amounts of savings, which they could then use for house moves.
`The Covid crisis also changed people’s preferences, increasing demand for larger houses with a garden in more leafy areas. As a result, potential buyers brought forward house moves they had planned for the future.
`The extra demand, unmatched by supply, meant house prices rose sharply. She points out that house prices continued to go up in Scotland, even after their tax breaks for residential Land and Buildings Transaction Tax stopped at the end of March.
`This has made the prospect of buying a home even more distant for prospective first-time buyers, she adds.
`By offering all buyers a stamp duty holiday, first-time buyers lost the rare advantage they had previously. Their own stamp duty break pre-pandemic had given them some bargaining power in the market.
`She says that the stamp duty holiday, which the Office for Budget Responsibility calculated would cost the taxpayer £4.7bn in two years, simply made “a hot market even hotter”.
That is it for this blog, if you ever need any help with stamp duty payments, or moving home or business premises, please give our office a ring for up to date advice.