With the tapering off of the holiday on Stamp Duty Land Tax, what will that mean for the housing market?
While the holiday was in place – with a nil rate band for Stamp Duty Land Tax (SDLT) on property sales up to £500,000 – there was a flurry of activity, with buyers seeking to complete their purchase before the June 30 deadline.
There is, of course, still a reduction to SDLT in place. From July 1 to September 30 the nil rate band is £250,000, returning to the standard amount of £125,000 on October 1.
But as we have written previously in Wigwam, this is by no means so generous, and will only be of significant benefit to property purchases which come in below £250,000.
Many believe the full impact of the SDLT holiday - which was introduced in July 2020 to give the housing market a boost, as the country was coming out of the first lockdown - won’t be known for some time.
The SDLT holiday contributed to increasing house prices, as people rushed to take advantage of the tax break. In April alone, the national average asking price rose by just over 2%. The number of houses selling within a week of being advertised hit its highest-ever level in March, at 23% of sales.
At the same time, this frenetic activity was contributing to a shortage of houses for sales. Property analyst TwentyCi said going into an estate agent was akin to “walking into the supermarket and finding the shelves are not fully stocked and, in some cases, practically empty”.
What happens over this summer and into autumn will give us an indication of how the housing market will behave. The ending of furlough may well have an impact – will people feel less inclined to move? Will the shortage of housing stock also deter people from moving, as they will be reluctant to sell with little choice of what to buy?
There is one certainty in all this, and that is if you are looking to sell, especially if you want to sell quickly, then ensure you have everything in place to make the process as smooth as possible. If you know of a potential issue – such as a covenant relating to your property – then give as much information as you can, straight away, to your lawyers who will be able to resolve matters.
Similarly, if you are looking to buy, then secure your mortgage offer, and understand all fees relating to a purchase, so you know what you can afford.
If you are looking for a property lawyer, please get in touch with Optimum. Email firstname.lastname@example.org.