Tag Archive: Durham Estate Agents

Impact of Budget 2021 on the property market

On 3 March 2021, Chancellor Rishi Sunak announced that the Stamp Duty Land Tax (SDLT) holiday will be extended until 30 June 2021 after facing pressure to extend the deadline by three months amid concerns of a ‘cliff-edge’ come the end of March.

In the 2021 budget, Sunak confirmed that buyers hoping to make the most of the savings of the higher £500,000 nil-rate band will now have until the end of June to complete sales in England and Northern Ireland. From the end of June until the end of September 2021, the nil-rate band will reduce from £500,000 to £250,000.

This comes as a huge relief to homebuyers who were hoping to take advantage of the holiday, yet with the initial deadline looming, were not so optimistic about the transaction completing in time.

The holiday was intended as a stimulus for the property market, and many buyers were encouraged to enter the market as a result. Many homeowners escalated their plans to move in order to make the deadline and benefit from the tax relief. In fact, according to Zoopla, in the last quarter of 2020, there were over 140,000 more people in the process of purchasing a property than there were in the previous year, with an estimated 418,000 home sales progressing to completion.

Alison Kent, Branch Manager/Valuer at George F. White, says: “In the 2021 Budget, the Mr Sunak gave the housing market a double boost yesterday, in the form of the Stamp Duty holiday extension and 95% mortgages. Extending the Stamp Duty holiday until the end of June, then phasing it out until September should help avoid a sudden downturn in prices caused by the much-feared cliff-edge end.

“With the zero-rated Stamp Duty limit extended to £250k until the end of September and the average UK house price being £252,000, it means that thousands of people can benefit from this incentive – particularly first and second-time buyers”.

 

SDLT explained

The initial threshold is where SDLT starts to apply. If you purchase a property for under £500,000 before the June deadline, there is no SDLT to pay.

On purchases over the £500,000 threshold, buyers will pay a 5% SDLT on the portion from £500,001 to £925,000, 10% on the portion from £925,001 to £1.5 million, and 12% on any portion over £1.5 million.

 

Property or lease premium or transfer value

SDLT rate

Up to £500,000 0%
The next £425,000 (the portion from £500,001 to £925,000) 5%
The next £575,000 (the portion from £925,001 to £1.5 million) 10%
The remaining amount (the portion above £1.5 million) 12%

Visit gov.uk for more information

On property purchases from 1 July to 30 September 2021, the SDLT threshold on residential properties will be £250,000. From 1 October, and the SDLT threshold will be £125,000 for residential properties.

 

First-time buyers

From 1 July 2021, if you, or anyone else you’re buying with, are first-time buyers, or if the purchase price is £500,000 or less, you will get a relief that means you’ll pay less or no tax. You’ll also be eligible for this discount if you bought your first home before 8 July 2020.

 

Help to Buy

Announced in February of this year the scheme has been extended until the end of May to mitigate transactions that have been unduly delayed by the impact of the pandemic. The replacement scheme will still launch in April for new applicants.

Calls to extend the Stamp Duty Holiday

A petition which was launched towards the end of October 2020 and gained sufficient support for it to be heard in Parliament was discussed in a virtual debate yesterday.

The 90-minute debate saw ministers respond to the requests for an extension to the deadline which was set for Wednesday 31st March 2021.

It is understood that circa 613,000 properties are in the national sales pipeline and as many as 100,000 may miss out on the tax break and that would result in lost savings of around £15,000 per transaction on average.

MPs debated the pros and cons of the holiday including lost revenue to the Treasury if extended which was countered by claims of lost revenue from the wider economy if transactions levels in the property market fall. Suggestions were made that included the possibility of extending the scheme outright as well as with limitations, the latter perhaps permitting those already in the sales pipeline to complete transactions without missing out on the savings. More bold statements that the threshold is permanently set at the current £500,000 level were also made.

“I think those already in the pipeline need to push their legal advisors on both sides so that everyone involved in a deal is focused on meeting the deadline but for those not yet in that position and given the delays we have seen in converting acceptable offers to completed sales time is very much running out,” said Melissa Lines, Senior Associate and Branch Manager/Valuer at the Durham office of George F. White.

Melissa adds “My advice would be that if you are looking to sell your property it needs to be on the market now, if the holiday is extended it is likely only to be for a fixed time and I wouldn’t recommend waiting for a Government announcement before you act”.

As it stands the discussion in Parliament merely repeated the conversations that have already taken place on many a property forum and no decision was reached, eyes are now firmly on Rishi Sunak and his budget statement scheduled for Wednesday 3rd March.

If you would like to talk to our team about selling your property please call 0333 920 2220.

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