A Busy Summer For The UK Property Market
Three more months of the Stamp Duty Holiday – the sigh of relief amongst property professionals and buyers was almost palpable this week as Rishi Sunak made his budget announcement.
Not only does this mean the continued ‘frenetic’ pace of the property market for the foreseeable, but a ‘tapering off’ of the Stamp Duty Holiday means there won’t be any feared cliff edge either.
The Chancellor’s decision not to end the popular cut to stamp duty abruptly at the end of March means thousands more couples and individuals in England will benefit from a maximum of £15,000 savings on property valued at up to £500,000. After June the Stamp Duty threshold will reduce to £250,000 until October this year when it will then revert back to the standard £125,000.
Thousands Of Property Sales ‘Saved’
Rightmove predicts it will mean another 300,000 property sales via its property portal by the end of October. The threat of the March 31 cliff edge meant thousands of transactions wouldn’t have met the Stamp Duty deadline, with the prospect of many sales falling through.
But even now those intending to buy are being urged to get their transactions in motion as soon as possible to meet the June cut-off date for the higher savings. For months now, since Sunak introduced the Stamp Duty Holiday there has been a backlog as surveyors and solicitors hurried to keep up with demand. Instead of the usual 12 weeks for a transaction to go through, many buyers are today having to wait up to 20 weeks.
House Prices Remain High
The extension of the Stamp Duty Holiday means house prices will remain the same or increase. Certainly, there is no fear of them falling in the meantime, with the value of the average property having increased by £20,000 since the cut to Stamp Duty was announced last October.
The average property is now worth £231,068, according to Nationwide. Their latest survey for February shows an increase of 6.9% in value compared to February in 2020.
But it’s not just a cut in Stamp Duty that has kept prices rising over the past 12 months many analysts say. Incredibly low mortgage interest rates have played their part, as has the pandemic itself. Lockdown prompted a rethink for many householders, causing thousands to look for greener spaces and more room. And neither interest rates not that desire to move out of overcrowded cities and towns are likely to change for some time.
High Loan To Value Mortgages Are Back
And in fact, the government is encouraging Generation Rent to become Generation Buy by encouraging lenders to offer 95% mortgage deals. Available for both first-time buyers and those who’ve already bought but want to move up the ladder, it’s for properties valued at up to £600,000. Whether this will result in price inflation as a previous high loan to value mortgage scheme did, remains to be seen.
Portfolio Landlords See Rise In Corporation Tax
Landlords with a handful of buy-to-let investments who are registered as limited companies are facing bigger tax bills. The Chancellor yesterday also announced a rise in Corporation Tax from 19% to 25% in April 2023. Businesses making a profit of more than £50,000 a year will pay more tax on a rising scale. Although, only those with profits of £250,000 annually will pay the full 25% tax rate.