Please note: The information contained in this blog is correct as of 06/07/20. Due to the developing nature of the coronavirus pandemic, guidance is subject to change. As a result, we would always advise you speak with a specialist for specific legal advice.
Since our last blog updating on how changes to the government’s COVID-19 restrictions were being relaxed to enable to property market to start moving again, we have seen a boom in residential conveyancing. Whilst this fits in the with some predictions, other commentators on the property market anticipate it to be temporary, which will come to an end when the full impact of coronavirus begins to be felt by the country’s economy. Either way, at present buyers seem to be benefitting from a suddenly increased choice of properties for sale and seller’s are benefitting from a suddenly increased number of buyers.
What is the Government proposing?
Chancellor of the Exchequer, Rishi Sunak, had identified that the UK economy needs support in getting back on its feet and is currently preparing a raft of measures due to be revealed during his Summer Statement on Wednesday 8th July 2020.
A proposed Stamp Duty Land Tax holiday, increasing the current threshold of £125k to possibly as much as £500k would be designed to make it more financially realistic for first-time-buyers to get onto the property ladder. The government has acknowledged that moving house has far-reaching benefits for the UK economy and this may form part of a wider rethink of property taxation. It is likely that a stamp duty holiday would help maintain the current rush of transactions but it is also likely that any new threshold announced this week will only to be temporary.
In response to the proposed increase in stamp duty threshold, Tom Bill, Head of UK Residential Research, commented: “A stamp duty holiday would provide welcome financial relief for millions of people, including first-time buyers. However, it would need to be introduced immediately to prevent buyers from putting plans on hold and losing the momentum that has built since the market re-opened.”
It has also been suggested that eliminating the higher rate stamp duty for buy-to-let investors would help drive wider activity in the housing market but this would seem contrary to the intention to stimulate first time buyer purchases as both groups would likely be seeking to purchase the same properties.
It could also be argued that the proposed increase in stamp duty threshold will only benefit a small proportion of first time buyers as there currently exists First Time Buyer Relief for those purchasing their first home for £300,000 or less paying no SDLT, and those purchasing for between £300,000 and £500,000 paying 5% on the amount above £300,000.
Whilst Tomer Aboody, director of property lender MT Finance, has welcomed the proposed stamp duty holiday, he has stated that “what has been suggested so far doesn’t go far enough. The threshold for higher-end properties – £1m-plus – is still at extraordinarily high levels, which prevent many from selling or buying. While giving a stamp duty holiday at entry-level, why not also reduce the higher-end stamp duty to previous levels where it was a set amount?” Mr Aboody went on to the give the example of older buyers who would like to downsize but end up spending a large part of their sale proceeds on stamp duty when selling up and buying something smaller.
It has also been identified that a wider ranging stamp duty holiday, even for a short period, would not only enable buyers to move up and down the ladder more easily but would also stimulate the economy as people move, develop, refurbish, buy furniture etc., therefore boosting business across the board.
As matters currently stand, there is no definite idea of what the Chancellor will announce on Wednesday but it is encouraging for the property market that there is clearly an intention to offer some support. Once the Summer Statement has been announced and we have had the opportunity to consider the impact on the housing market, we shall provide an update blog.
If you are looking to buy or sell a property, our conveyancing team can assist with the legal aspects. Get in touch with the team today on 0845 287 0939, submit your enquiry through our online form or get a no obligation quote online for buying or selling your house.