Property market foundations strengthened by Chancellor

Home buyers across Britain breathed a sigh of relief this week when the Chancellor of the Exchequer, Rishi Sunak, announced that the Stamp Duty Land Tax (SDLT) holiday in England and Northern Ireland was to be extended. 

The deadline on the previous SDLT holiday was looming, with it due to end on 31st March. It has now been extended to the 30th June, followed by a tapered ending until 30th September for properties up to £250k. 

Mr Sunak stated that the SDLT extension is part of the Conservative Party’s commitment to turn “generation rent into generation buy”.

Home buyers with only small deposits saved were also given a boost, with a new support package being announced which involves the Government providing a mortgage guarantee scheme for lenders who offer 95% mortgages. There is a £600,000 limit on the price of homes which are eligible for this scheme.

What is the Stamp Duty holiday?

Stamp Duty is a tax paid by house buyers. The SDLT holiday has seen the threshold for this tax be raised to £500,000 for property sales in England and Northern Ireland until 30^th June 2021. 

This can result in thousands of pounds of savings. Indeed, since the holiday period was introduced last summer some Harvey Homes buyers have saved up to £15,000 in stamp duty – a considerable financial sum. 

According to figures from Zoopla, 750,000 homebuyers in England are collectively set to save almost £5billion in taxes as a result of the SDLT holiday.

The SDLT extension rules are as follows:

• The stamp duty holiday applies to first-time buyers and those who have previously owned a property. 
• If the property being purchased is more than £500,000, the buyer will pay stamp duty based on the revised rate bands. 
• If a buyer is purchasing a second home, they’ll still pay stamp duty on properties that cost more than £40,000 at the new revised rates – paying an extra 3%.
• The new tax applies to both freehold and leasehold properties. 
• The new tax applies whether a buyer is buying outright or with a mortgage.
• The changes to stamp duty will only apply to homes in England and Northern Ireland.

Looking at Harvey Homes’ ‘Tabley’ style home, the stamp duty savings would be as follows:

• 0% on the first £500,000 = £0
• 5% on the final £355,000 = £17,750 
• Total SDLT = £17,750 (instead of £32,750)

The importance of the UK Property Market

Since the COVID-19 Pandemic started, the effect on the housing market has been huge, with activity slowing considerably. 

However, the government recognised that the sector was instrumental in reviving the beleaguered UK economy and thus introduced the SDLT holiday last summer to get people moving again. 

The plan worked, with thousands of buyers incentivised to look for a new home. Many of these house-hunters were prompted by months of restrictive lockdown measures which had left them cooped up in homes with little outdoor areas and limited flexible living spaces. 

As ‘working from home’ has become the new norm, many buyers have been seeking homes with office spaces and rooms that can be multifunctional so that they adapt to the needs of family life. 

The flexible living spaces that are a prominent feature of Harvey Homes properties have been very appealing to families, couples and single people alike. The same space can be repurposed as an office, family dining area, playroom or whatever you like – the possibilities really are endless!

The revitalisation of the UK property market has had a significant effect on the wider economy, with the UK’s GDP set to return to its pre-Covid peak in mid-2022 (according to the Office for Budget Responsibility), six months earlier than previously anticipated.

The industry reacts

The news regarding the SDLT extension from the Chancellor’s Spring Budget 2021 was hotly anticipated by industry experts and professionals alike, with rumours about the extension circulating in the media for weeks prior to the announcement. 

Melanie Leech, Chief Executive, British Property Federation said: "The stamp duty holiday has kept the residential sector moving throughout 2020 and, with recovery still insecure, an extension is the right decision. The current ‘holiday’ has illustrated what a damaging tax stamp duty is – it stops people from moving home. Our tax system should focus on where value is created and that should mean working towards low or no stamp duty.”

Brian Murphy, Mortgage Advice Bureau: “Extending the stamp duty holiday for another three months for up to a £500k purchase price - followed by a tapered ending until 30th September for properties up to £250k - will mean home buyers currently in the process of completing their property transactions can breathe easy. It offers some much-needed latitude to the industry as conveyancers have been overwhelmed by the sheer volume of transactions, and so the extension should help ease the current bottleneck the market is experiencing.”

Contact us today to see if you can take advantage of the SDLT savings with Harvey Homes before 30^th June 2021!