Make The Most Of The Stamp Duty Holiday
If you want to sell your home in time to make the most of the stamp duty holiday extension, you had better act fast – you haven’t long left….
SDLT Holiday Extension
The extension to the stamp duty holiday was announced as part of the Spring 2021 Budget and sparked an immediate and lasting increase in people looking for new homes. Estate agents saw a surge of new potential buyers browsing the property sites and making enquiries even on budget day itself. This is up 82% compared to the same day last year. The Stamp duty rise isn’t the only factor encouraging homebuyers to take a leap of faith – the introduction of 5% deposits and 95% mortgages as well, led to Rightmove recording its busiest day for house hunting ever.
Can I Still Make The Stamp Duty Holiday?
In the current property market, the average time it takes for a seller to find a buyer for their property is 65 days. It can then take a further 126 days to complete the conveyancing process and reach completion. This data from rightmove would suggest that sellers should be looking to put their home up for sale by Tuesday 23rd March at the latest if they want to make sure that their buyers (and of course, themselves) are to make use of the the stamp duty holiday which is due to have tapered to a complete stop by the end of September when the old stamp duty rates return. Our stamp duty online calculator can show you what you will pay should you miss out on the deadline.
What Is The Stamp Duty Holiday?
The stamp duty holiday means that people buying a home up to the value of £500,000 will not pay any stamp duty at all if the purchase is completed by 30th June 2021. There has also been a cut for buyers of additional properties, for example buy-to-let investors. The new rate for additional properties starts at three per cent up to £500,000, which, using the same example of a £400,000 property, would save the buyer £10,000 in stamp duty.
To smooth the transition back to the old stamp duty rates, the nil rate threshold will be £250,000 until the end of September, before returning to the usual threshold of £125,000 on 1st October 2021. Using our stamp duty online calculator can show you what you could owe should you miss the deadline.
The Property Market
It makes sense that a lot of buyers currently have the impetus to move home so it can be reasonably expected that the spring market will be busy this year. It’s clear from rightmove data that the Spring Budget announcements have introduced potential buyers into the market who were previously unable to consider moving until now or who were waiting to hear what was going to happen to stamp duty, a factor they may have been banking on.
Not only has the Stamp duty holiday been extended but the 5% deposit / 95% mortgage guarantee has given many people the confidence they needed to forge on ahead with their home-moving plans. This may help the spring market activity and encourage more sellers to go to market especially in areas where the property prices are lower. People who may have been delaying a move for a number of reasons could now have the momentum to take the next big step in their property dreams.
The Chancellor’s announcement of a new mortgage guarantee scheme to encourage property buyers is also a deciding factor in many people’s decision to move.
Under the new scheme, the government will guarantee the portion of the mortgage over 80% (so, with a 95% mortgage, the remaining 15%). It sounds complicated but in simple terms it just means the government will partially compensate the lender if a homeowner fails to pay their mortgage. This will give lenders the security to reinstate the low-deposit deals, the likes of which were withdrawn at the start of the pandemic.
The Chancellor says that many major lenders including Barclays, HSBC, Lloyds Bank, NatWest and Santander will offer such deals beginning in April, with others including Virgin Money following shortly after.
The scheme will be available on new and existing properties priced up to £600,000. It will also allow buyers to fix their initial mortgage rate for at least five years. It will apply throughout the UK and will run until 31 December 2022.
Who Can Apply?
- The mortgage guarantee scheme is available to both first-time buyers and previous home owners across the UK.
- You must be buying a property to live in yourself meaning that second homes and buy-to-let properties are not included in the scheme. (For an additional dwelling supplement calculator see here).
- Both new-build and existing properties priced up to £600,000 are eligible to be included in the scheme.
- You must take out a repayment (not an interest-only) mortgage and pass standard affordability checks, such as the usual credit score assessment.
- The mortgage you’re applying for will need to be for somewhere between 91% and 95% of the value of the property you wish to buy,
- The scheme is initially set to run from April 2021 to 31 December 2022, though this will be reviewed before the end date.