Property portals and mortgage brokers report a surge in activity as buyers look to make savings of up to £15,000 from the tax break. Demand for property and mortgages is rocketing as first-time buyers, home movers and buy-to-let investors look to grab a major tax saving before the stamp duty suspension expires on March 31, 2021. The holiday applies to purchases of up to £500,000, which means nine out of 10 buyers should avoid the levy altogether.
The Chancellor announced the stamp duty holiday in last Wednesday’s mini-Budget, to get the economy moving again.
Housebuilders, estate agents, removals firms, tradespeople and home furnishing companies should all benefit from more sales.
Property portal Rightmove has reported a 49 percent rise in demand for homes between £400,000 and £500,000 – just under the threshold at which stamp duty now applies.
Demand for more expensive properties has also increased, with a 40 percent rise in inquiries for property of up to £750,000.
There was a 26 percent increase for homes priced at £300,001 to £400,000, while homes priced below £300,000 saw the smallest rise in inquiries – just one percent.
Rightmove’s commercial director Miles Shipside said demand is coming from people looking to see what they can afford or trading up to more expensive homes, as they now have more cash. He said: “This is going to help the mid-market the most, but all parts of a property chain are vital to keep the market moving.”
Chancellor of the Exchequer Rishi Sunak
Milton Keynes, Watford, Harrow, Chelmsford and Ilford saw some of the biggest jumps in buyer inquiries.
Mr Shipside warned the surge in demand could come at the expense of first-time buyers, who face greater competition from buy-to-let investors and second homeowners.
First-time buyers were exempt from stamp duty up to £300,000 but have lost that relative advantage as stamp duty savings now apply to all. Online mortgage broker Trussle has also seen a surge in demand from buyers, with home loan applications up 40 percent on last year.
Head of mortgages Miles Robinson called on lenders to match strong demand from first-time buyers, by relaunching higher loan-tovalue (LTV) deals again, after pulling most of them in the pandemic. Most will only lend up to 85 percent LTV which leaves first-time buyers needing a 15 percent deposit. But Nationwide said it will reintroduce 90 percent LTV deals for first-time buyers from Monday.
The stamp duty holiday applies in England and Northern Ireland.
But yesterday the Welsh Government announced a holiday from July 25 worth £2,450 on properties up to £250,000, restricted to homebuyers rather than investors.
Tianna Dash, 31
Offer too good to miss, sis…
Tania, 35, and Tianna Dash, 31, calculate they will save up to £6,300 in costs which will be the perfect opportunity to start their buy-to-let portfolio.
The sisters are looking to buy property where they live in Liverpool and believe the stamp duty cut is too good to miss.
They want to become full-time developers, insisting: “We will continue to invest in buy-to-let even when the stamp duty holiday expires.”
Tania Dash, 35
First-time buyer Paul is quids in
First-time home buyers like Paul Bishton, will save thousands of pounds thanks to the new rules.
Last October, the 26-year-old had an offer accepted on a £375,000 new build one-bedroom flat in Leytonstone, east London.
His transaction stalled in the pandemic, like many others, but he is now pressing ahead.
As a first-time buyer, Paul would previously have benefited from the first-time buyer stamp duty exemption on the first £300,000, while paying 5 percent on the remaining £75,000.
Now he will pay no stamp duty at all, saving him £3,750.
Many say the stamp duty holiday could drive up prices and make life harder for first-time buyers, but Paul is now safely on the property ladder.
He added: “If my new mortgage application is approved, I’ll complete on July 31.”
First-time home buyer Paul Bishton
Comment by Harvey Jones
The British housing market is back. It doesn’t take much to persuade Britons to go property hunting again and buyers are out in force.
Millions of us spent the lockdown sitting in front of our laptops and tables, browsing property portals and estate agent websites in search of our next dream home.
That has led to a lot of pent-up demand, which is now being unleashed by Chancellor Rishi Sunak’s stamp duty holiday on properties that are worth up to £500,000.
This generous tax break will save buyers up to £15,000 – and estate agents, mortgage brokers and lenders are being inundated with demand as a result.
While Sunak’s holiday only applies in England and Northern Ireland, politicians in Wales and Scotland have been pushed into introducing their own stamp duty cuts, although these are not quite as generous.
This is the shot in the arm the housing market needs as the economic cost of the pandemic threatens to destroy confidence.
The last thing we need right now is a house price crash, on top of all the other worries afflicting the economy.
The truth is that stamp duty is a bad tax. It makes moving home to find work unnecessarily expensive and punishes older people looking to downsize from large family properties, who will pay the levy on their newer, smaller home.
Sunak should spend the next few months looking to overhaul the system, to prevent a crash and make it fit for purpose.
Could he scrap it altogether? We can dream. Future tax cuts could be in short supply, as the national debt spirals. Enjoy this holiday while it lasts.