Fylde coast house buyers lost out after Stamp Duty tax break caused price inflation
The Stamp Duty holiday during coronavirus pushed up house prices outstripping any tax savings, a report says.
Based on latest data from the Office for National Statistics, a report from national estate agent Hamptons found the resort’s house price increase averaged £14,310, a 13 per cent rise, while the average Stamp Duty saving was £520.
That’s an increase 27.5 times more than the tax saving.
The tax holiday, announced by chancellor Rishi Sunak in July 2020 removed Stamp Duty from home sales under £500,000. In July this year that ceiling fell to £250,000 but from October 1, it has returned to pre-Covid level of £125,000.
The chance to buy a property without having to pay the extra Stamp Duty proved a huge boost to the market. But because demand was so high, sellers hiked prices and the Land Registry says house prices are up by 8.1 per cent nationally over the year.
Craig Aikman, head of property at Lancashire’s Vincents Solicitors, said the price increase had not put people off.
He said: "The lower average value for properties in Blackpool meant the stamp duty saving was always going to be smaller than for buyers in areas with higher asking prices, but the scale of the price inflation in comparison has been remarkable.
“The last 14 months has been the busiest our conveyancing department has ever known, with twice as many transactions than the same period in previous years. This is due to both the increase in demand and our ability to service more clients as we took the opportunity to grow our core residential team and take market share from our competitors.
“What’s interesting is the activity in Blackpool has been particularly strong, with more properties coming to market than expected from sellers taking advantage of the boom, and a confidence in achieving sale price pushing up values.
“Part of that is the same as the national picture, buyers are looking for more living space, bigger gardens, room for a home office etc following lockdown, this is something we’ve seen across each of our branch offices in Lytham, Penwortham, Chorley and Garstang.
“A large portion of sales in Blackpool has, however, been investments for rental and holiday lets, with investors making the most of the low prices to build their portfolios. These buyers would not benefit from the Stamp Duty holiday which could explain the low tax savings figure, and would have contributed to the house price rise.”
Fears of the market falling ‘off a cliff edge’ have abated as the government responded to industry calls for a tapered end to the Stamp Duty holiday.
It was due to finish in May but was extended to September 30 for properties valued under £250,000, giving agents and solicitors chance to help purchasers already in the process of buying, complete in time.
Craig added: “Everyone in this sector has been working flat out to help clients get their sales completed before the deadline. But the return to the original Stamp Duty level is not expected to see demand fall too much.
"There are further government incentives announced to help First Time Buyers with Stamp Duty relief up to £300,000 and a mortgage guarantee scheme, the mortgage companies seem to have a greater appetite for lending, and consumer demand remains high.
“I think spending so much time in our homes over the last two years has really focused people’s minds on what they want from their physical space, and the momentum in the market will continue for some time yet.”