A growing number of sellers are cutting asking prices ahead of this month’s stamp duty deadline in order to offset the incoming cost increase and entice buyers into a purchase, with the largest share of price reductions coming across the core segment of the market, where properties are set to be most affected by the removal of current stamp duty relief thresholds.
GetAgent analysed the current property market for sale stock to determine the proportion of home sellers that have already reduced their asking price expectations and how this varies by price category.
Whilst existing homebuyers currently pay no stamp duty on purchases up to £250,000, this threshold is set to reduce to £125,000 as of 1st April, with a 2% charge applying on the next £125,000 portion from £125,001 to £250,000.
Thereafter, stamp duty rates for existing buyers remain unchanged, with the next £675,000 up to a price of £925,000 continuing to see a charge of 5% applied, with 10% owed between £925,001 to £1.5m and 12% applied to any portion above £1.5m.
Whilst those purchasing properties up to £250,000 are set to hit by an additional 2% tax come April, the analysis by GetAgent shows that many sellers have already moved to help mitigate this cost by reducing the asking price on their properties.
In fact, the highest percentage of homes to have seen an asking price reduction sit within the price ranges set to be hit by higher stamp duty costs.
Over a third – 35.4% – of all homes listed up to £125,000 have currently seen an asking price reduction, suggesting that many sellers may have realigned their price to sit beneath the new threshold at which no stamp duty will be payable as of 1st April.
Additionally, 37.6% of all homes priced between £125,000 and £250,000 have seen a price reduction, again suggesting that sellers are lowering their price expectations to help alleviate the burden of the additional 2% in stamp duty owed as of 1st April.
Meanwhile, 34.6% of homes listed for sale between £250,001 and £950,000 have seen an asking price reduction, falling to 31.1% between £925,001 and £1.5m and just 28.7% over the £1.5m threshold.
The analysis by GetAgent also shows that it’s the most expensive regions where the most homes have seen an asking price discount, with the South East (40.5%), London (38.8%), East of England (35.7%) and South West (35.7%) seeing the highest proportion of homes listed subject to an asking price reduction.
The co-founder and CEO of GetAgent.co.uk, Colby Short, commented: “Reductions to asking price are unfortunately commonplace in any market landscape as sellers will chance their arm with a slightly over-ambitious valuation, before readjusting to current market values having received little to no interest during their first few weeks or months on the market.
“However, it’s clear that with April’s stamp duty changes now on the horizon, a higher proportion of sellers are also lowering their expectations at the key price points in the market in order to account for these changes and entice a buyer.
“As a result, the highest proportions of asking price reductions are currently being seen by those repricing below the new 0% stamp duty threshold of £125,000, or those pricing up to £250,000 in order to help mitigate the additional 2% in stamp duty that buyers will soon face.
“This suggests that the nation’s sellers remain keen to transact and that any market correction that does come as a result of the impending stamp duty changes will be a minor one.”