We are undoubtedly in the midst of housing boom. Who would have thought that was even possible this time last year as we all embarked on this strange Covid world?
The housing market has been on the rise for some months. The government’s stamp duty cuts, the realisation that we all want more from our homes – namely space – and of course the pent up demand during lockdown, when house viewings were suspended, has really buoyed the market and we’re seeing unprecedented numbers of transactions.
The initial stamp duty tax (SDLT) relief had been due to end in March and people already in the process of buying a home clamoured to get the deal done before the deadline.
But the extension, which doesn’t see normal levels of tax return until October, has spurred those only thinking about moving into actively doing something about it. This in turn has boosted property prices across the board.
It’s not just the tax relief that has impacted the market. First time buyers have long been considered the life blood of a strong housing market and the introduction of the government backed 95% mortgage scheme, has helped this growth. First time buyers, who were desperately saving for large 20% deposits, are now able to buy a home much sooner with just 5% to lay down.
The current SDLT threshold was increased from £125,000 to £500,000 and it will remain at this level until June 30. It will then drop to £250,000 for a further three months before returning to its normal level on October 1.
It means that, by and large, anyone buying a home costing up to £500,000 before 30 June will not pay any Stamp Duty, although the additional 3% for second homeowners, and a new 2% “non-resident surcharge” may still apply.
In analysing the housing market, we should also consider the impact the pandemic and how our working patterns have changed.
In the early stages of the lockdown, working from home often meant setting up on the dining room table. It was ok it wasn’t going to be for long! But many people, and businesses, have seen the positive impact working from home has had, not least in productivity and recruitment, and priorities have changed. There is certainly now more of a demand for outdoor space, and we’re seeing a large number of buyers make the move from London to the South West.
It remains to be seen how long this level of activity can be sustained, but this has been a welcome boost to the UK’s overall economic performance just when it was most needed.
For more information please contact Emma Page at epage@thrings.com
