So even if we can’t travel, we are getting a stamp duty holiday! What exactly does that mean? Well I’m going to be discussing that in this article. As I work with both buyers and sellers, helping them to achieve their real estate goals, I love sharing the insider information and property market changes to help you invest or sell at the right time, with the best support. On the 8th of July the chancellor of the exchequer Rishi Sunak announced that the UK government would be putting in place several key measures to prop up the UK economy and try to get it going.
One of the most significant things from my industry was that the threshold at which there would be relief on stamp duty would be increasing up to £500,000, meaning for purchases up to £500,00 there would be no stamp duty surcharge and anything above £500,00 would get a significant savings of £15,000 off of the amount that they would have paid otherwise.
Now it does mean for investors or people buying a second home they are still subject to the additional 3% surcharge on the amounts below 3% but it means across the board as you calculate the amount you would have owed you’re saving £15,000 if your purchase is above £500,00 and given that London’s average property price is well over £600,000 for most London properties, you’re going to see that savings of £15,000.
Now, this holiday is only through purchases that complete through March 31st 202 but the good news is if you’ve recently exchanged and haven’t completed you are still going to get that benefit. I’m working with several international buyers right now who are definitely going to be benefiting from this additional tax saving.
You may ask what exactly is stamp duty? Stamp duty is a tax on purchase, it’s something that many international buyers, especially in America, might not be familiar with. I’ve got a great video on stamp duty – what it is & how it’s calculated, so make sure to check that out.
As I mentioned the stamp duty holiday is part of several measures that really have the goal of trying to prop up the UK economy, which has suffered like most economies in the world due to the corona virus. In addition to the stamp duty reduction other key measures that are being introduced include a 50% discount for diners; VAT on food, non-alcoholic drinks, accommodations, and attractions will be reduced from its current 20% down to 5%, which is a potential boost of £4 billion to the entertainment and restaurant, industry which is quite critical and has suffered tremendously through the coronavirus.
What exactly are the implications of the stamp duty holiday for both buyers and sellers?
Well, obviously for buyers it means that they’re going to be saving a considerable amount of money if they take advantage and purchase and complete their transactions by 31st of March 2021. It means that those who might have been considering whether to hold off and see if more discounts are going to be achieved, and see if property prices are going to be going down significantly, might really get spurred to come off the fence because anything you might achieve in a price reduction you’ll also now get this additional stamp duty reduction as well.
What it’s meant is that on the portals we’ve definitely seen a jump in activity and inquiries and I know certainly for myself from the listings we have at Keller Williams we’re definitely seeing increased activity as well.
Rightmove which is the major property portal has announced that they saw a 22% increase in just the 30 minutes after the announcement was made in terms of traffic to the website and they’re definitely seeing record levels of inquiries and activities on those portals.
If you are wondering how much stamp duty is actually going to cost you, make sure to check out the stamp duty calculator, here.
Now, for sellers what does a stamp duty holiday mean? Well it means that you’re likely going to see more inquiries on the listings or your property that’s for sale now but the market is still highly price sensitive so it does mean you still need to price your home right and to price it in the market not above it. If you try to go above the market this market is highly price sensitive, you’re definitely not going to see the activity from buyers who really have plenty of other choices but it does mean that you could definitely present buyers for the same home who are now going to be saving £15,000 pounds and so from a negotiation perspective we can definitely demonstrate that you know the buyers are getting some benefit so the sellers should be as well.
It takes nothing away from all the key tips I always talk about in terms of how to present your home correctly – make sure it shows great, make sure it’s being marketed effectively and proactively, because we still have a significant reduced amount of transaction volume, so if you want your home to stand out you definitely need to price it right, and present it well.
Recognising that more buyers might be in the market for now than they would have in the past it also might mean if you’ve been thinking about holding off to sell because the market hasn’t been great in terms of pricing, then now may the time to look at your own personal situation to consider is now really the great time to sell? If not, what we’re probably going to experience is after March 31st is a downturn in terms of activity.
Buyers will be taking a break who are rushing to get it done by 31st March and we’re going to see it cooling off, so if you don’t sell now or in the next six months, you might be holding off a lot longer to really see a rebound in prices and does that really impact your life personally if you choose to wait?
I’m taking on a new listing, I’m so excited it’s one of my neighbours here where I live, but they’re moving for a complete change of lifestyle. It’s an older couple with adult children and are going to be looking to move into the secondary market of Manchester, which has got an international airport and really will help them to continue the lifestyle that they now want to experience in their mid 60’s. If you are in a similar situation, then now may be the perfect time to sell.
I definitely recommend you consider as a seller to take advantage of this opportunity to put your home on the market, price it right to sell so it can allow you to move on to what it is you want to achieve and really enter into the next chapter of your life.
So I hope this article has given you some great perspective on why now might be a great time to take advantage of the stamp duty holiday and save some money if you’re a buyer but also sell your home if you’re looking to sell in the next few months.
© Onyx Property Team