Earlier this month, the Chancellor, Rishi Sunak, held a summer statement in which he announced a range of measures to help kickstart the economy post-Covid-19.
The statement, which was essentially a mini Budget, had a significant focus on housing with two new major policies revealed. A stamp duty holiday will benefit the majority of property buyers over the coming months, while there will be additional funding made available to improve the energy efficiency of the nation's housing stock.
The Covid-19 pandemic has had a major impact on all parts of life, including the property market. However, since the market reopened in mid-May, its recovery has been impressive as people look to move home after lockdown.
With these two new government policies set to provide the market with a further boost, here's our roundup of what you need to know…
How does the stamp duty holiday work?
As of July 8, the stamp duty threshold has been increased from £125,000 to £500,000 until March 31 2021 across England and Northern Ireland. This means that no stamp duty will be paid on the first £500,000 of a property purchase over the next ten months, potentially saving buyers thousands of pounds. According to the Chancellor, the tax cut will mean that 90% of main properties purchased during this period will be exempt from stamp duty. Rightmove estimates that the typical London buyer will save £15,000, while those in the South East will save a bit less at an average of £10,980. For example, if you purchase a home for £650,000, your stamp duty bill would now be £7,500, as opposed to £17,500 before the holiday was imposed. Buyers of cheaper homes will also benefit. A home worth £300,000 will now be exempt from stamp duty, saving the buyer an impressive £5,000. You can calculate how much your stamp duty bill would be using this calculator.
Do first-time buyers and property investors benefit?
First-time purchasers have benefitted from a stamp duty holiday on the first £300,000 of a purchase since 2017. However, those buying more expensive properties will now be brought in line, a move which is likely to benefit many first-timers in London and the surrounding areas. Meanwhile, since 2016 landlords and purchasers of second homes have been required to pay a 3% stamp duty surcharge. The government has confirmed that this will remain in place, but second property purchasers will benefit from not having to pay traditional stamp duty rates on the first £500,000. A second home worth £350,000 will now have a stamp duty bill of £10,500, down from £18,000, while a property costing £550,000 will now require £19,000 to be paid instead of £34,000.
How could this help the property market?
Alongside the savings for buyers, sellers are also likely to benefit from increased demand. With more buyers encouraged to enter the market due to the prospect of saving thousands of pounds, competition for sellers' homes will be higher. This means the chance of selling your property quickly and for the best possible price are significantly increased. Prospective sellers are warned to act quickly as the boost to demand is likely to encourage lots of homeowners to list their properties in the coming months. As always, it's important to make sure your property is in tip-top condition. It’s also important to go to market with a reputable estate agency such as Kings Group, making sure your home is priced properly and gets the exposure it deserves. The effect of the stamp duty holiday on prospective buyers is already apparent. In the first 30 minutes following the Chancellor's announcement, traffic on Rightmove surged by 22%. What's more, the property website reports that the number of potential buyers contacting agents about available properties on July 8 was 93% higher than the same day in 2019, reaching a new record. It's expected that this heightened interest in moving is likely to be sustained over the coming months, which is great news for the market as it continues to recover from the impact of Covid-19.
What is the Green Homes Grant?
During his summer statement, the Chancellor also announced the details of the 'Green Homes Grant', a £2 billion initiative which aims to boost the green credentials of the country's housing stock. From September, homeowners and landlords will be given the chance to apply for vouchers worth up to £5,000 to improve the energy efficiency of their properties. The government grants will cover at least two-thirds of the cost of work for improvements such as wall, loft, floor or cavity insulation at a limit of £5,000 per property. Low-income households will be able to apply for vouchers covering the full cost of any work up to £10,000. The government estimates the Green Homes Grant will help to make over 650,000 homes more energy efficient, saving households up to £300 on their annual energy bills. This scheme could be really valuable for landlords and homeowners looking to sell up in the future. As we all become more conscious of our carbon footprint, energy efficiency is rising up the priority list of buyers and tenants. Green homes with cheap energy bills are likely to appeal to a wide pool of movers and could help you to sell or let your property for a higher price in a quicker timeframe.
Here at Kings Group, our offices are now open again from 10am to 5pm, strictly adhering to our Covid-19 policy. You can find out more about our client Covid policy here.
To find out more about getting your home sold or for any advice on the moving process, please contact us at one of our many branches across London, Essex and Hertfordshire.
If you are thinking of selling your home, you can request a free and instant online valuation to give you an idea of how much it could be worth.
