Tax cut stimulates housing demand
On July 8th of this year, Chancellor Rishi Sunak announced a raising of the stamp duty tax threshold. For buyers of primary residences worth up to £500,000, stamp duty has been cut for property transactions that take place up until the 31st March, 2021. Properties in excess of this threshold will only pay tax on the amount above the £500,000 mark. Depending on the sale price of the property you’re looking at, buyers can save as much as £15,000 which is an incredibly tempting prospect for most people. So, as we’re now a couple months into the stamp duty holiday, how has this initiative impacted the overall property market so far?
Many property analysts incorrectly predicted a bust of the property market following lockdown. So far, this has yet to have been the case. With pent-up demand as a consequence of weeks of inactivity, there has been a flurry of enquiries, offers and properties being put up for sale. And rightly so, if vendors wish to take advantage of the stamp duty holiday then now is the time to act. A firm of estate agents in Basildon reminds us that although 31st March may seem a long time away, the timescales of moving home are slightly longer than the pre-pandemic norm. Mortgages and local searches are all taking extra time to be returned at the moment and every week of delay brings us closer to the deadline.
Far from being a property slump, there have been signs of both increased numbers of transactions as well as boosted sales figures. 70,710 sales completed in July, which was up 14.5% from June. Although figures are still below the average from 2019, there’s every sign that this could correct before the year is out due to the strength of the market during the stamp duty holiday. The increase in demand from buyers has also inflated sales figures somewhat, with Nationwide reporting a 1.5% house price index increase during July.
Home buyers are not the only segment of the property market to benefit from the stamp duty holiday. Although landlords are still required to pay an additional 3% buy-to-let tax on any properties purchased, they’re also still able to take advantage of up to £15,000 in savings during the stamp duty holiday.
Coinciding with the stamp duty holiday, the Help To Buy scheme has been extended to 28 February, 2021. The scheme applies exclusively to new-builds, which is putting considerable pressure on builders to complete homes on time. On the day of this announcement, buyer enquiries increased by a significant 51%.
It’s certainly true to say that the stamp duty holiday has had the desired impact and has stimulated the property market sufficiently. Buyer and vendor confidence is high and will remain so until the end of March, 2021. For those interested in taking advantage of this generous incentive, the time to act is now. Whether you’re looking to buy or sell, register with a reputable estate agent and speak to a mortgage broker about your affordability.