Stamp Duty Holiday: The Good, the Bad and the Ugly
Stamp Duty Holiday: The Good, the Bad and the Ugly
Whilst everything on the surface might look rosy, if you are thinking about moving to take advantage of the Stamp Duty holiday then read on as it could end up actually costing you money!
There was much excitement following the Chancellor’s announcement last month that it was to be abolished for properties under £500,000 in England and Northern Ireland.
It was excellent news for the property market and I have personally not known the housing market to be as busy as it is in the 16+ years I’ve been working in estate agency.
However, as we know, all good things must come to an end. In this instance it is the 31st March 2021. That might seem like a way off yet…. BUT…… you need to exchange contracts on your house purchase by the 31st March 2021, which puts a whole new spin on things, which I’ll go over in a bit.
One thing that I will always give is my professional and honest advice. It might not be what people want to hear, but we’re not here to tell you how amazing your property is and that we will sell in an instant (Yes, some agents do say things like this). We’re here to listen to what your story is and give you our advice based your circumstances, backed up with our experience and understanding of the market.
Whilst there is undoubtedly savings to be had there are A LOT of things to consider when thinking about buying or selling, if you are specifically thinking about doing so to save paying the tax.
First of all, with schools starting again soon, let’s have a bit of a history lesson!
What is Stamp Duty?
It was introduced way back in the late 1600s, and it was initially a way for the monarchy at the time to raise much-needed funds to fill their war chests as they fought battles against France.
While we may not be at war with France, it still exists in the property sector, and it’s easy to see why, as it enables the Government to swell its coffers by billions of pounds each year.
So, whatever the history or the rights and wrongs of it, it has always been an important factor for home buyers.
The Good
There is plenty to save! If you’re buying a house in the area that is less than £500,000, you will pay zero Stamp Duty. Here’s the savings.
£250,000 – £2,500
£300,000 – £5,000
£350,000 – £7,500
£400,000 – £10,000
£450,000 – £12,500
£500,000 – £15,000
Anything over £500,000 still gets the £15,000 saving as well. According to the Chancellor, Rishi Sunak, this will help nine out of 10 buyers.
The holiday has been hugely influential in people bringing their properties to the market in the £250,000 bracket, who otherwise would have stayed where they are. This then had that knock on effect for first time buyers and those looking to up to £250,000
However as more people have sold their £250,000 property to upsize, the supply has dwindled.
The Bad
This lack of supply is now a problem as those that are selling have to wait for a property to come to the market that ticks the boxes for them. “How longs a piece of string?” comes to mind!
What makes it harder is that the whole Stamp Duty holiday is on a count down.
As we know the holiday comes to an end on the 31st March. However you need to have not only had agreed a sale on your property, found somewhere to buy, be in a complete chain, had a survey and mortgage sorted, but also all the legal aspects need to be tied up so you can exchange contracts. If you don’t exchange you don’t save.
As there have been so many sales agreed, solicitors and surveyors are inundated with new business. Naturally sellers are going to be waiting a lot longer to be in to a position to exchange. We had a call this week from a surveyor to carry out a mortgage valuation and the earliest they could get there was on the 21st September!
What was once a 2 month job to get a sale through could well take 3-4 months at the moment and can you imagine what it is going to be like being a conveyancer in March 2021 when pretty much everyone will be insisting that their sale and purchase exchanges to make sure they make the savings!
The Ugly
In my opinion if you are not in a complete chain by the end of October I would say that you are not going to take advantage of the Stamp Duty holiday.
There is no doubt that some of the properties you see on the market today are only up for sale if the owner can take advantage of the saving and as such there will be a number of properties removed from the market at the end of the year if they can’t sell/can’t find somewhere to buy.
On top of that we have the fact that the furlough scheme is coming to an end in October and whilst there is more government intervention that will see employers receives £1,000 per ex-furloughed staff member providing they are still in employment in January, it is likely that we will see more redundancies in the coming months.
A final thing to think about is what will you do if you are pushing as hard as you can to get that sale/purchase over the line but it simply doesn’t happen in time? Will you have that £5,000, £10,000 or £15,000 hard cash ready to pay the stamp duty tax? Will your buyer? If not then you will you walk away and lose out on mortgage application fees, survey fees? Search fees? Solicitors costs etc that could be well in excess of £2,000. You could actually lose money.
Think long and hard about marketing your property at the moment, especially if you are up-sizing. It is not a one size fits all industry by any stretch of the imagination. You are all different in your reasons for selling and buying. We’re here to offer you correct advice that is not sugar coated.
Remember though!
Not everyone is moving to save on Stamp Duty. People will always have to move and I stand by the fact that we in South Craven are really lucky to have such wonderful communities, local shops and businesses, superb schooling, beautiful parks and excellent transport links. All the things that people want, which is why, even if the housing market does start to struggle, there will always be demand for nice properties in nice places like ours!
Thanks for reading
Michael
What some honest, expert and friendly advice? Call the office on 01535 666031, call me direct on 07557 088460 or email me: michael@leightonsestateagency.co.uk
