Changes to SDLT
One of the more surprising handouts from the chancellor in response to the pandemic was the stamp duty holiday. As it comes to an end we explore what impact this will have on the housing market.
SDLT is the tax you pay on property purchases. The amount you pay depends on the value of the purchase. Prior to July 2020, SDLT was payable on all properties priced over £125,000.
In July 2020 Rishi Sunak announced temporary changes to the SDLT regime which were designed to boost the property market and help buyers who had been affected by the pandemic. The changes meant that buyers paid no SDLT on the first £500,000. The changes were set to come to an end in March but were extended to 30 June 2021.
The reversion to the previous SDLT regime is to be implemented in a phased way so that from 01 July 2021 SDLT is not payable on the first £250,000 of the purchase and then from 01 October 2021 the rules revert to the pre-pandemic position and SDLT is paid as follows:
Is the bubble about to burst?
As buyers rushed to complete purchases before the 30th June deadline you may think that this will be the end to the massive rise in house prices we have seen in the last twelve months, a 13.4% increase according to the Nationwide Building Society.
However, many commentators believe that SDLT change is unlikely to make much of an impact on the housing market. Some suggest that as many people have been forced to work at home, they are looking to increase space and as there is such low supply of properties in some areas, this is fuelling the continued demand for homes and rise in prices.
In addition, many of those lucky enough to remain in employment throughout the pandemic are finding they have built up a decent savings pot as lives have been curtailed by lockdowns and spending has decreased. These savings coupled with low interest rates will make mortgages more affordable, are facilitating a move up the property ladder.
Further help from the Treasury
The Treasury is introducing new support provisions for first time buyers from 01 July 2021 in that first time buyers will not have to pay any SDLT on the first £300,000 of any purchase.
In addition a Government guarantee scheme means that most mainstream lenders will fund 95% of the purchase price as a priority. This scheme is aimed to help first time buyers but is open to anyone buying a house valued at up to £600,000 other than as a buy-to-let or second home.