With the recent announcement from UK Government of a stamp duty holiday until the end of MARCH 2021, there has been a resurgence in property activity nationwide.

Below is a snapshot of how the Stamp Duty Holiday will affect the cost of buying a property; as well as the short and possible longer term impacts to UK housing.

How do the Stamp Duty changes work?

For anyone buying a residential home for their primary residence up to the value of £500,000, there will no SDLT tax between now and 31st March 2021.

To illustrate the savings, for a house purchase of £500,000 previously there would have been an additional £25,000 in SDLT to pay which has now been reduced to £0.

SDLT Rates prior to the Holiday New SDLT Rates – From March 31st 2021

What about Property Investors?

The new threshold of £500,000 applies to both property investors and overseas buyers, however the 3% SDLT surcharge is still payable. This is still great news and will result in thousands saved in SDLT with an example an illustration below.

For a buy to let investor, purchasing a property for £500,000 they will now be paying just 3% rather than 8% in SDLT. This will result in a SDLT bill of £15,000 rather than the £40,000 SDLT which would have been payable prior to the announcement of this holiday.

How has this affected the UK Property Market?

Short Term

From a short-term perspective, these changes have resulted in a seller’s market and agents listing properties at prices slightly higher than they may have prior to this holiday.

DMR speak with agents daily and the amount of interest has resulted in a flurry of viewings and subsequent offers. Many of these have been achieving asking price due to the flurry of interest creating panic to offer on or above asking price. This has been particularly prevalent in the suburbs as buyers are now looking for options with slightly more space to work from home as well as outdoor space also.

However, with the right negotiation it is still possible to agree a sale under asking price as well as the benefit of huge savings on SDLT.

Long Term Effects (Possible)

The Government are being proactive in an attempt to ensure there are little to no declines in property values. Regular planning changes to create property extensions and change of use from commercial to residential are already underway making it an interesting time for investors.

However, with the pandemic, fresh in peoples mind there is still a lot of uncertainty around. In the coming months there are expected to be job losses, further global uncertainty and Brexit ahead of us there are still hurdles ahead to ensure property prices are not affected too badly.

For a property purchase to live viewpoint, now is as good as time as any as if the market does drop slightly you will be buying in the same market as you will be selling.

From an investment view, a change of strategy may be required. Whereas previously BTL and HMO properties were providing good returns, there is likely to be even better returns looking at the commercial to residential conversions. However, this approach is a lot more complex so the best advice would be to expand your knowledge base and network with like minded investors already operating in this field.

Thanks for reading our Property Investor News – 2020 Stamp Duty Holiday Article

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