Chancellor Rishi Sunak and the Treasury are set for a stamp duty windfall as house prices boom and a tax holiday starts to taper off
Chancellor Rishi Sunak will be hoping for a boost to Treasury coffers as a stamp duty holiday starts to come to an end amid rising house prices.
The Government introduced the stamp duty holiday in July 2020 to stimulate the housing market after the impact of the coronavirus lockdown.
It has meant that people have only had to pay stamp duty on the value of a property above £500,000, meaning many homebuyers have been able to avoid it entirely.
The holiday is due to start tapering off from July 1 with the threshold set at £250,000 and it will then be lowered again to the standard amount of £125,000 from October 1.
The beginning of the end of the holiday comes as research showed house prices in prime markets outside London have increased by 8.5 per cent year-on-year, representing the strongest growth in a decade.
Experts believe that the end of the holiday will not deter many buyers which could lead to a surge in revenue for the Treasury in the second half of 2021.
Chancellor Rishi Sunak will be hoping for a boost to Treasury coffers as a stamp duty holiday starts to come to an end amid rising house prices
The Government introduced the stamp duty holiday in July 2020 to stimulate the housing market after the impact of the coronavirus lockdown
The estate agent Savills said its research had revealed an 8.5 per cent annual increase in house prices in prime markets which generally includes the top five per cent of homes by value.
The company said it had seen particular booms in prime coastal and £2million-plus country house markets, which have had annual price growth of 14.6 per cent and 12.9 per cent respectively.
Savills head of residential research Lucian Cook said: 'Demand has continued to outstrip supply in many of the most sought-after prime regional markets and this has led to rapid price growth, most notably in markets that had long lagged London in their recovery over the past decade.'
He continued: 'We're starting to see a gap open up between buyers and sellers in terms of the pricing.
'With the impetus of the stamp duty holiday coming to an end and evidence that what has been fairly intense buyer demand may be softening, it will be more difficult for price growth to keep pace with sellers' rising expectations of the value of their home in the way it has in the past year.'
Property price growth in prime central London remains relatively subdued at just 0.5 per cent year-on-year, given ongoing constraints on international travel, the report said.
Mr Cook said: 'We have continued to see price growth over the past quarter despite the looming stamp duty holiday deadline.
'Our June client survey told us the majority of prime market buyers (71 per cent) are not concerned about the removal of the stamp duty holiday, while just five per cent of those still hoping to complete by the end of June said they might reconsider their purchase.
'So while stamp duty is clearly not a major factor for the prime markets, we do expect to see some of the urgency coming out of decision making.'