In March 2020 the housing market, like the rest of the UK, came to a sudden standstill. Lockdown restrictions scuppered thousands of home move plans, grounding those who may have been just days away from picking up their keys and forcing those hoping to put their homes on the market to press pause on their plans. At Lloyds Banking Group alone, the number of transactions completed fell by 57% between March and April.
Unsurprisingly, as things reopened in the summer, the government was keen to get the market moving again. On 8 July 2020, as part of his Summer statement which included introduction of the Eat Out to Help Out scheme, Chancellor Rishi Sunak announced he would lift the Stamp Duty threshold in England and Northern Ireland to £500,000 – a move mirrored by changes to the Land and Building transaction tax thresholds in Scotland and Wales’ Land Transaction Tax . Anyone buying a home with a value less than this amount wouldn’t pay Stamp Duty at all, while those buying homes with a value above the threshold would only pay tax on amounts above £500,000.
This news, combined with more than three months’ pent up demand, proved to be a much needed shot in the arm. Demand rose rapidly, superseding pre-pandemic levels within a month. But what prospective buyers looked for in a new home had fundamentally changed.
For months, homes had been transformed from simply being places to live to taking on a myriad of new roles. They became our offices, our schools, our gyms, even our very own exclusive nightclubs (remember Sophie Ellis-Bextor’s kitchen discos?). As buyers searched for more space, and with many feeling less need to be within commuting distance of their traditional workplace, many prioritised criteria that hadn’t previously been a consideration.
Owing in no small part to the Stamp Duty holiday, the surge in mortgage applications that we saw over the summer continued through to the end of 2020 and into 2021. Those transactions completed in the second half of 2020, saved home movers an average of £11,566 on stamp duty costs. This figure increased to £15,000 in London and the South East.