What does the Stamp Duty holiday mean for the property market and you?
Looking back to the start of 2020 the UK housing market looked strong, with Nationwide reporting a 14-month high in property values. A 1.9% increase on the same time the year before, and an average price of £215,897.
In December 2019, UK banks had approved the highest number of mortgages since 2015, first time buyers had increased and accounted for the lion’s share of the market totalling 55.7%, and the Government had committed to a £12bn Affordable Homes Programme between 2021-22.
We all know what happened next.
No economist could have predicted the reality of 2020 and the absolute standstill experienced because of the coronavirus pandemic, which saw the housing market grind to a resounding halt in April.
Following a really strong March, residential property sales hit their lowest monthly level since records began in April and even when the restrictions were lifted in May, it was difficult to predict how consumers would respond, with so much uncertainty around job security and the wider economy.
House prices fell at the fastest rate since 2009, and within a matter of days, housing commentators and estate agents, all reported a surge in demand. Mark Bilton, Executive Director and Head of Residential Property in Mansfield says ‘We have been totally blown away by how quickly the market has bounced back, with demand for conveyancing work actually higher this June than last with July heading the same way. I don’t think this bounce back has been so dramatic in the south of the country which is why the government reacted in their special post-Covid recovery budget by introducing a Stamp Duty Holiday on the first £500k of any property purchase.’
What is Stamp Duty and what does the holiday mean?
Stamp Duty Land Tax (SDLT) is a tax added on all property and land transactions in England, Wales and Northern Ireland and buyers must pay Stamp Duty Land Tax if they buy any property or land over £500,000.
On July 8th, the Government announced a temporary holiday on stamp duty on the first £500,000 of all main residence property purchases in England and Northern Ireland until the 31st of March 2021. This is for both first time buyers and those moving home. If you completed a purchase before this date you will be required to pay full normal stamp duty, however, if you have exchanged the contracts but are still waiting for completion, you will be able to benefit from the changes.
This will save buyers as much as £15,000, if they are buying a property of £500,000 or more, however Chancellor Rishi Sunak has advised the average saving will be £4,500.
Mark says ‘What we are noticing is that clients are now able to add the savings from the stamp duty into their initial deposits, meaning that they can secure a better mortgage deal. For some this will make the difference in getting a mortgage at all. For others it will mean no longer having to borrow from the bank of mum and dad which is something else we’ve seen a lot of recently.”
Based on the current average value on Zoopla (16.07), If you are looking to buy a house in the following areas you would see an average saving of;
Average house price: £199,531, average saving: £1,490.62
Average house price: £163,925, average saving: £778.50
Average house price: £171,498, average saving: £929.96
If you have any questions about the stamp duty holiday or about purchasing a new home, our conveyancing team can help. Speak to them today by calling 0330 017 6306.
You can also find out how much your property will cost now the changes have been introduced, by using our stamp duty calculator.