The Government’s decision to repeal the Property Stamp Duty “holiday” on properties priced between £125,000-£175,000 may well spur a flurry of new property sales before the end of the year.
According to Edinburgh’s leading property solicitor Warners, many would-be homebuyers are likely flock into the market and try to secure a sale before December 31st in order to avoid paying Stamp Duty Property Tax on their new home.
Househunters across the UK have been reaping the benefits of the Stamp Duty holiday since last year, when it was introduced by the government in an attempt to re-stimulate the lower end of the property market.
Under the move, the usual 1% Stamp Duty charge applicable on properties priced between £125,000 and £175,000 was waived, in order to encourage more first-time and low-end buyers to purchase a new home.
The freeze was due to come to an end by January 2010, although many property experts anticipated that it would be extended further in order to bolster the UK’s property market. However, after the Chancellor Alistair Darling recently announced that he would not be extending the Stamp Duty holiday into 2010, buyers will now have just over three months to secure a new home and avoid paying the tax.
Scott Brown, estate agency partner at Warners, believes that the announcement may well cause a flurry of activity in the property market before the festive holidays, as people desperately attempt to avoid the tax.
He said: “The Stamp Duty holiday has been very successful and we’ve seen many buyers returning to the property market over the past year, which has caused both house prices and the number of sales to rise.
“However, many people were expecting the tax holiday to be extended into the New Year in order to further strengthen the property market. Now that the Chancellor has announced that this won’t be happening after all, it is likely that we will see many buyers trying to purchase a property before the end of the year.
“There’s no doubt that buyers returning to the market are now more cost-conscious than they were before the credit crunch. The attraction of saving between £1250 and £1750 on their new home will be a major enticement for them to act now – particularly if they had originally planned to wait until next year to buy their new home.
“The re-instigation of the tax may also have positive effects on people selling their homes, as buyers will want to complete their purchase before the New Year to avoid the extra tax and may be willing to pay the seller slightly more in order to finalise the purchase quickly.
“I think this decision may create an unexpected ‘winter warmer’ for the property market that is likely to lead all the way up to the traditionally quiet Hogmanay period.”
Warners, which has four property shops in Edinburgh, has been the Capital’s leading property solicitor in terms of property sales and listings for the past decade.