Don’t worry, we are not about to fall off a cliff
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Two months into 2025, and the market has been as busy as the start of any year since the pandemic.
Kate Gillard, Residential Property Valuer, writes that this partly has been down to a certain rush to get sales over the line before the stamp duty discount ends on 31st March, but for those who have expressed concern that activity could dry up after that date, I have some good news.
It can be tempting to predict doom and gloom following such a deadline, but we should remember that all that is happening is that stamp duty rates are returning to their ‘normal’ levels after a period of temporary discounts. So this is less a ‘hike’ in stamp duty and more of a normalisation.
More saliently, we should never forget why people buy houses. Very few purchasers are acting for purely financial motivations. Most are buying a home, and generally it is their hearts which lead them in this. They are thinking more in terms of their future lives living in that home, and the value – both financial and emotional – they can add to it, rather than the initial costs of moving, which in the grand scheme of things play quite a small part.
It is interesting the number of properties we have seen go to full and final offer this year. That is when buyers are competing to secure the home of their dreams (against other prospective purchasers) and are prepared to pay above the purchase price to do so.
Clearly stamp duty is not at the front of these people’s minds; whilst very few buyers’ budgets are unlimited, we are seeing a certain flexibility from those who are determined to find and buy the right home for them.
Partly this is because a greater proportion of purchasers are buying houses as their principal residences, as opposed to second homes or for investment purposes. Inevitably the former buy more with their emotions, whilst the latter are driven by more rational, financial considerations.
So should potential sellers be worried about what some commentators are calling the ‘stamp duty cliff-edge’ at the end of this month? Well, certainly anyone currently moving a sale through will try and complete before the deadline to save a few pounds on stamp duty. But the end of a temporary discount in stamp duty is unlikely to have a long-term effect on demand, because the buyers who are moving for the long-term and emotional investment will still be searching for their dream home.
The thing that really drives the market is people wanting or needing to move, and a relatively minor tax adjustment is unlikely to have any significant effect on that.
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