The pick-up in activity that normally accompanies the end of a stamp duty holiday will be more muted in March 2012 than it has been previously because only first-time buyers qualify for relief, according to Capital Economics.
Since March 2010, FTBs have been exempt from paying the 1 per cent stamp duty on properties priced up to £250,000. However, as it currently stands, from March 25, 2012, the threshold at which stamp duty becomes payable will revert to £125,000 for all buyers.
Capital Economics says there is normally a 20-40 per cent increase in transactions in the final months of the stamp duty holiday, but the increase is likely to be lower this time given the current economic conditions and that only FTBs are eligible for relief.
In a note published today, it says: “With the market still in the doldrums, it is perfectly possible that the stamp duty holiday is extended. But while the market remains overvalued, the chances that a stamp duty holiday will provide a kick-start for transactions, or even a material short-term boost, seem remote.”