A lot has happened in the last year, and even in the last few months!
Alongside everything else, HM Queen Elizabeth II sadly passed away, we had a major government change with Liz Truss taking over from former Prime Minister Boris Johnson, and interest rates are at their most confusing level in a long time.
We always like to keep up to date with current affairs, but one thing that has stuck out to us this week is Liz Truss’ recent announcement about another potential stamp duty amendment.
In 2020, former chancellor and runner-up in the recent conservative leadership race, Rishi Sunak, announced a stamp duty holiday to combat the negative effect Covid-19 had on the UK property market.
In August 2020, property sales rose by 15.6%, and by a further 21.3% in September 2020. This holiday meant homebuyers would pay 0% stamp duty on the first £500K of their property purchase. This then changed from June 2021, to 0% on the first £250K, applied to any property sales reaching completion by September 2021.
This obviously had a massive impact on the property market, with house prices remaining at an average of +10.5% even post-June. Statistics show that 1.3 million+ people utilised the stamp duty relief on the first £500K of their purchase during the holiday.
Stamp duty has now returned to the previous level and has left many homebuyers in a position where they have paid much higher prices than they might have done pre-Covid19. Was the holiday a short-term solution? Probably.
The current stamp duty tax brackets are as follows:
|Property Price||Stamp Duty Percentage|
|£0 to £125,000||0%|
|£125,001 to £250,000||2%|
|£250,001 to £925,000||5%|
|£925,001 to £1,500,000||10%|
Most estate agents are now dealing with the repercussions of this, with a combination of the ‘boom’ cooling off, and interest rates becoming concerning for many homeowners. This has resulted in far fewer properties becoming available, and many buyers left stuck due to the lack of housing stock. First Time Buyers struggled during and after the holiday, with increased demand for properties pushing house prices even further out of their reach, and now uncertainty looms around mortgages and interest rates.
Chancellor Kwasi Kwarteng is expected to announce details of the ‘mini-budget cut’ on Friday, 23 September, and the announcement is noted to “aim to stimulate further growth in the property market and help more young people buy their first home”. This upcoming announcement has been met with mixed reactions, with some critics concerned that this may be another short-term and ineffective solution, and may hold potential to worsen the housing crisis, especially for those hoping to purchase their first home. It is certainly possible that another holiday may be much less effective than the first, in terms of ‘heating up’ the market again, and instead simply create further costs for the government without reasonable benefits to the economy.
However, another Stamp Duty cut may benefit many homeowners across the country, as well as buyers. If similar to Rishi Sunak’s original bid to boost the market, we can certainly expect a lot more available stock to arise within the coming months, and house prices are likely to increase again. As a seller, this could mean great things, as you may benefit from higher offers on your property, but your onward move will of course also be affected by the rise.
Investment purchases will also be expected to increase, so areas may benefit from more rental properties, or ‘flipped’ houses entering the market in the coming year. However, First Time Buyers will likely once again struggle to get a firm grip on the property ladder, as their deposit savings up to now may no longer sit at a comfortable level for lenders.
We await Liz Truss and Chancellor Kwasi Kwarteng’s announcement and will always remain informed on our local markets, in addition to national circumstances.
If you require any property advice, we are always available, 7 days a week, and if you require any form of financial advice, our partners at Markland Hill Wealth would be more than happy to assist you.
Lily | Sales & Marketing