Budget: Sunak announces stamp duty nil rate extension in March
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The stamp duty holiday is due to come to an end on October 1 which means the nil rate band will return to £125,000. Tomorrow marks the last day of the tampered stamp duty holiday which was first introduced in July 2020 and extended in March 2021. Since July 2020, house prices have surged by nearly £20,000 while property transactions hit a record high in June 2021 as buyers rushed to complete their sales before the first stamp duty deadline.
The rush to complete transactions before the stamp duty holiday, property concierge app Moveable revealed that 11 percent of buyers – almost 2.4 million – overpaid by thousands.
Moving and conveyancing costs also increased as more people looked to move house.
Many buyers found themselves paying over the odds for these services while hoping to save up to £15,000 on their stamp duty bill.
However, many transactions saved far less than this figure.
The stamp duty rush also made it difficult for movers to complete each stage of their transaction correctly.
iPlace Global, creators of property concierge platform Moveable (moveable.uk) commissioned a landmark study to understand buyer sentiment and how much the market cost buyers.
The study found that over 1.9 million Britons rushed their transactions and 2.39 million overpaid by thousands during their home move due to having to rush and not understanding the process.
Thirteen percent of buyers didn’t budget for extra fees around their home purchase.
Simon Bath, CEO of iPlace Global said many people “paid over the odds” on homes this year and on moving house.
Mr Bath said the stamp duty looked like “an obvious way” to save cash but it ended up costing more than it saved.
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He continued: “Services overcharge in response to increased demand and a lack of available resources, and people rushing to make the deadline have no time to shop around for the best deal – and just want to complete as soon as possible.
“This is a problem especially for those looking to get on the property ladder for the first time, a lack of knowledge and experience can be costly.
“It is always difficult to know exactly what do to at each step of the move and especially doing it at the right price, and the pandemic and the myriad new additions to our homes has only worsened this.”
Matthew Gibbons, Regional Vice President EMEA Commercial Sales at DocuSign agreed and said many buyers were rushing to complete the correct documents for their transaction.
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A DocuSign survey also revealed that 79 percent of homebuyers in the UK were attempting to buy their house before the stamp duty deadline.
Furthermore, Mr Gibbons said nearly a fifth (18.7 percent) believed they would need to remain in or move to rented accommodation if they missed the deadline.
The property expert believes the process could have been “simpler” for buyers.
He said: “Manually navigating contracts is time consuming and, without the proper tools, it can significantly delay the purchase as well as cause frustration and stress.
“Our research showed over 80 percent of first-time buyers in the UK ask for electronic contracts rather than physical documents and 55 percent want to make payments online, but only 27 percent have been provided with these digital tools.
“Additionally, purchasers pointed to two main reasons for delays in completing contracts which resulted in missing the deadline, with 24 percent claiming it is due to holdups caused by property owners, while 21 percent referred to lockdown restrictions.
“This reiterates the need for the property sector to adopt digital tools and solutions which create an easier process.”
Survey respondents also said they would spend the money they saved on stamp duty to make another purchase like a holiday.
A quarter of respondents said they would face financial hardship if they had to pay stamp duty.
“While the tax break provided a boost to the UK property market, this indicates homebuyers will be heavily impacted by the return of stamp duty,” Mr Gibbons added.
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