How Will the New Stamp Duty Change Affect the Property Market
On 3rd March 2021 The Chancellor Rishi Sunak announced an extension to the Stamp duty break to last until June 30th 2021. House buyers won’t be required to pay stamp duty on a house worth up to £500,000. Previously their was zero stamp duty on homes up to 125,000 this will return in September. Between the 30th June (when the Stamp Duty holiday ends) and September the starting price for stamp duty will be £250,000, this is in an effort to gradually phase out the scheme.
The Extension has Prevented People Missing the March Deadline and Chains Collapsing
This extension to The stamp duty holiday has been seen has an effort to curb an unexpected house crisis from sales not completing in time. Completions have been taking a lot longer and it was estimated that up to 100,000 house buyers were facing an unexpected tax bill of up to £15,000 if they missed the old deadline of 30th March. This would have meant if one seller pulled out entire chains could have collapsed and in turn that would have forced others to need to sell their house fast and possibly lower their sale price. Mr Sunak’s once boost to the property market was about to have a sting in the tail if he didn’t introduce this sensible extension.
It is not Expected to Create a Further Increase in House Prices
Most commentators have associated the “mini Boom” in prices that we experienced in 2020 with the Stamp duty holiday scheme. Sellers scrambled to sell their house fast in a effort to buy a new house in what would be a tax free move, saving up to £15,000. There has been an unexpected delay in the amount of time it has taken to complete and this currently stands at between four to six months from when a sale is agreed. Due to this it is expected that the extension will only allow for existing sales that are currently going through the conveyancing period to complete before the 30th June.
Most mortgage advisors would probably make a prospective house buyer aware that it is unrealistic to complete in time for the 30th June on any new home purchase. It is certainly possible but many buyers will appreciate that it is unlikely that they will be receiving the tax saving on a newly agreed sale.
95% Market Value Mortgage Assistance Scheme Has Been Announced
Regardless of a Stamp Duty saving if buyers are unable to attain a mortgage then the property market may become stale. In the past, it has been pointed out that there is a restriction of the availability of lower deposit mortgages and the lack of high LTV 90% and 95% mortgages will mean that many first time buyers will also struggle to save the required deposit. The Government have introduced a measure to force the hand of the lenders to supply more easily attainable mortgage products to first time buyers. In return more buyers may enter the market and that will fuel price demand and help stabilise property prices. This announcement was also confirmed on The March 3rd budget statement.
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