End of stamp duty holiday cools property market

A recent surge in property prices is coming to a close as the stamp duty holiday is withdrawn, bringing an end to a boom that has seen increases in the cost of housing hit a 17-year high.

The holiday, brought in alongside a raft of other measures designed to cushion the impact of COVID-19 restrictions on ordinary families, has been credited with causing the surge, alongside a general desire for more living space caused by the realities of lockdown life. This surge sent house prices soaring to a level 10.5% higher than the same time last year, with the average residential property now costing £244,229, as buyers rushed to make purchases in anticipation of the measure’s tapered withdrawal.

However, that effect is beginning to wane, as houses worth more than £500,000 which led the boom with a 37% year on year increase become eligible for the full level of stamp duty payments again. This is likely to halt the steep rise in prices seen in recent months, but it may not puncture a hole in the market as some have feared.

Martin Beck, a senior economic advisor to the EY Item Club, said: “The pandemic has had potentially long-lasting effects on property preferences, not least raising demand for larger homes in a world of more home working. Combined with fuel for property deposits provided by the substantial savings accumulated by households during lockdowns, the ingredients are in place to maintain house prices at current, elevated, levels.”

Brought in during July 2020, the stamp duty holiday was designed to help people whose circumstances were affected by COVID to move house and brought the cost down to zero for houses worth less than £500,000. After almost a year, the holiday is now being slowly withdrawn and only affects houses worth less than £250,000 from 1 July 2021, and from 1 October the cost will go back to pre-pandemic levels.

Need to make your move before it’s too late, or do you want to strike while the iron is hot and get the most value for your assets? Get in touch with OGR Stock Denton. With 50 years of experience providing residential property services to thousands of families across London and the UK, we have the experience and skills to make your purchase or sale as quick and easy as possible.

To make an appointment to discuss any aspect of residential property law please email or phone 020 8349 0321.

Webinar – Covid and divorce, 12 months on…

OGR Stock Denton LLP would like to invite you to join our live webinar – Covid and divorce, 12 months on…

4.30pm, Thursday 11th March 2021

Zoom webinars

Join our live interactive discussion, where our experts reflect on the past 12 months and consider the issues for family lawyers as we come out of the second UK lockdown.

Topics covered in this webinar include:

  • What are new clients reporting in terms of separation and divorce due to lockdown issues
  • Reported case law during COVID-19
  • What will never be the same for divorce lawyers again post lockdown
  • What could improve when we are out of lockdown
  • Professional practice points and the future outlook for divorce lawyers

Hosted by Graeme Fraser, Partner and Head of Family team at OGR Stock Denton LLP, and guest speaker Max Lewis, Barrister and Arbitrator at 29 Bedford Row Chambers.

If you would like to join this webinar, please email Ali Kabani:

akabani@ogrstockdenton.com

 020 8349 5514

Webinar – How secure is the Bank of Mum and Dad?

OGR Stock Denton LLP would like to invite you to join our live webinar – How secure is the Bank of Mum and Dad?

1.00pm, Tuesday 2nd March 2021

Zoom webinars

With the introduction of the Stamp Duty Land Tax (SDLT) holiday in England & Wales there has been a surge of applicants borrowing money from their parents to purchase either their first and second home

This webinar will look at the legal and tax implications of parents lending money to their children to purchase a home, particularly where spouses and cohabitees are involved, including some recent case examples of how we helped clients in similar situations.

If you would like to join this webinar, please email Ali Kabani:

akabani@ogrstockdenton.com

 020 8349 5514

Stamp Duty holiday for UK home buyers

The COVID-19 pandemic has turned many industries upside down by virtually shutting off their customer base, and the Government has resorted to a variety of extreme measures in order to limit the damage that the businesses in these industries suffer. Of all these measures, one of the biggest is the Stamp Duty holiday, which could exempt home buyers from tens of thousands of pounds in costs. So how does the holiday work, who does it affect, and how can we help? Let’s take a look.

What is the Stamp Duty holiday?

Chancellor Rishi Sunak implemented the Stamp Duty holiday to revive the flagging housing market, as the residential property market clamped up in response to the economic situation. The measures mean that Stamp Duty only has to be paid on properties worth more than £500,000, rather than the £300,000 limit under the old rules. This measure actually doesn’t mean much for first time home buyers, because the average new house only costs £208,000, but to professional landlords and investors, it can mean a huge boost to their profits.

What are the potential savings?

For property dealers who regularly transact in homes worth more than £500,000 the old SDLT regime would have seen them pay in excess of £30,000 in Stamp Duty alone, paying 3% on the first £125,000, 5% on the next £125,000 and 8% on the last £250,000. Now, as a result of these changes they will only pay the minimum rate of 3% on the sale, so a £500,000 property will only cost them £15,000 in tax. Clearly it’s well worth considering investing during this holiday, which ends in March 2021, due to the level of potential savings. To find out how much stamp duty you would need to pay please use the SDLT calculator on the government’s website.

How can we help?

If you’re an existing landlord or investor hoping to capitalise on the holiday, or you’re a new starter looking to dip your toes in the water, it pays to get expert advice in these unprecedented times. While this is a potentially golden opportunity to make a life-changing investment, the difficult economy also makes it a serious risk, and to go about it without the best help could have serious consequences. Thanks to our years of conveyancing experience, and our down to earth and no-nonsense advice, we can help you make the best investment with your money and to ensure you make the most out of the SDLT holiday.

If you’ve got your eye on a property, and you’d like to make your move during this time, get in touch with one of North London Property Solicitors by email or call (0)20 8349 5501.

Government publishes detailed guidance on SDLT holiday

During his Plan for Jobs announcement, Chancellor Rishi Sunak issued guidance for a temporary eight month cut in Stamp Duty Land Tax (SDLT) that ensures there is not a charge on ‘any’ residential property transactions with a value under £500,000.

The Government has achieved this by immediately lifting the lower SDLT nil rate band from £125,000 to £500,000, which it claims will mean that nine out of 10 main home buyers will not pay SDLT until the thresholds revert in March 2021 to their previous levels.

In its latest guidance, the Government has confirmed that the SDLT holiday only relates to residential property transactions up to £500,000 – above which the original rates continue to apply.

The guidance also confirms that the additional homes surcharge of three per cent will continue to be charged.

However, this applies across the newly outlined threshold meaning that those subject to the surcharge will now pay three per cent on the first £500,000, rather than the first £125,000, which represents a significant discount on the previous SDLT rate.

Companies also benefit from this increase to the threshold, including businesses that buy residential property of any value above £500,000 where they meet the relief conditions from the corporate 15 per cent SDLT charge.

The nil rate band which applies to the ‘net present value’ of any rents payable for residential property on new leasehold sales and transfers is also increased to £500,000.

To help you visualise what this change means, we have prepared a helpful table below:

SDLT Holiday – First Time Buyer Rates SDLT Holiday – Non-First Time Buyer Rates (no additional properties) SDLT Holiday – Additional Homes Buyer Rates
£0 – £500,000 – 0% £0 – £500,000 – 0% £0 – £500,000 – 3%
£500,001 –£925,000 – 5% £500,001 –£925,000 – 5% £500,001 –£925,000 – 8%
£925,001 – £1.5 million – 10% £925,001 – £1.5 million – 10% £925,001 – £1.5 million – 13%
£1.5m+ – 12% £1.5m+ – 12% £1.5m+ – 15%

On the 1 April 2021, the reduced rates shown in the above tables will revert to the normal rates of SDLT that were in place prior to 8 July 2020.