As part of his summer economic update, effectively a mini summer Budget, the Chancellor Rishi Sunak recently announced a stamp duty holiday for all property sales worth up to £500,000 in England and Northern Ireland.
The new measure, heavily trailed in the media before it was announced, is aiming to provide a boost to a property market still recovering from a near two-month shutdown earlier this year, as well as encouraging more home movers to consider a move even with the challenges posed by Covid-19.
The signs for the property market since it reopened in mid-May have been promising, with many new movers entering the market and those foiled or delayed by lockdown acting decisively to pick up their transactions from where they left them.
The stamp duty holiday, which will save buyers thousands of pounds over the next 10 months, will provide further impetus to a market which plays a key multiplier role in the economy. For buyers, a house move will now be cheaper; for sellers, demand for homes is likely to now be much higher, which increases the chances of a fast house sale for a good price.
Here, we take a closer look at what Sunak announced and what it could mean for the market.
How has stamp duty changed?
The Chancellor used his address to the Commons on July 8 to outline a stamp duty holiday on the first £500,000 of all property sales, lasting until March 31 2021.
Like all stamp duty changes, it came into effect immediately, which means the threshold for where people have to pay the tax has been raised from £125,000 to £500,000.
Sunak said that nine out of ten main properties bought while the stamp duty holiday is in place will be exempt from the tax. Many first-time buyers were already exempt from paying stamp duty on homes worth up to £300,000 after a measure introduced by the previous Chancellor, Philip Hammond, in November 2017, but this change is much wider in scope, taking in first-time buyers, upsizers, downsizers and buy-to-let investors.
Property portal Rightmove backed up the Chancellor’s theory that around 90% of buyers will benefit from the change, with the website saying that 84% of its buyer enquiries are for properties priced below £500,000. Meanwhile, some 81% of available homes on the site have asking prices below the new stamp duty threshold.
Buyers in North London locations such as Enfield are likely to see considerable savings as a result of the government’s move. The typical London buyer is expected to save around £15,000 when buying a home between now and March next year.
Even those buying lower priced homes are set to be boosted, with buyers of properties worth £400,000 set to save £10,000 in stamp duty. Similarly, those buying homes for £300,000 and £250,000 will save £5,000 and £2,500 respectively.
What about landlords?
Since 2016, landlords and property investors have had to pay a controversial extra 3% stamp duty surcharge when purchasing second or holiday homes. The Treasury confirmed that this remains in place, although landlords will only have to pay 3% up to £500,000, rather than 5% or 8% (depending on the price of the house), as was the case before.
As a result, landlords will benefit from savings from paying no normal rates of stamp duty and reduced rates of the stamp duty surcharge on more expensive homes.
An investor buying a home for £350,000, for example, will now pay £10,500 in stamp duty instead of £18,000 before the stamp duty cut was introduced – a considerable saving.
Is now a good time to sell?
The latest research would suggest that, far from being an uncertain or dangerous time to sell, it’s actually a brilliant time to do it – especially if you are buying and selling at the same time. On the buying front, you’ll benefit from stamp duty savings, while on the selling side demand is likely to be increased because of the stamp duty changes.
More prospective buyers have entered the market since Sunak’s announcement. Rightmove, for example, reported that in the first half hour after the stamp duty holiday was announced, traffic on its site surged by 22%.
The number of potential purchasers contacting agents about property for sale on the day of the announcement hit a new record, marking a 93% increase compared to the same day last year, the website added.
Your chances of selling quickly, and for the best possible price, are enhanced by the current environment of high demand and lowered or no stamp duty. The more buyers who are interested in your property, the more virtual (and then in-person, socially distanced) viewings you can hold, and the more offers you will be likely to receive.
If, as a seller, you are thinking of coming to market, you should do so as quickly as possible while demand remains hot. It’s likely that more sellers will come to the market over the coming months, which will lead to a rise in competition, so it’s best to act now.
To find out more about how we can help you to buy, sell, let or rent in Enfield and the surrounding areas in the current environment, please give Angels Sales & Lettings a call on 0800 043 6778. At a time like this, community is currently more important than ever, and you can find out more about the work in our local area here.