Fifteen months on from the start of the pandemic, and it's been almost a year since the Chancellor temporarily reduced stamp duty tax rates to boost the housing market and the wider economy. The current stamp duty holiday was originally due to come to an end on 31st March, but was extended by a further 3 months until 30th June given the large volume of sales in the pipeline which were not going to complete by the orginal deadline. In a manner of speaking, that extension has simply 'kicked the can down the road' as the number of sales in progress remains at the highest level for years with solicitors, removal companies and mortgage lenders all struggling to keep up. House prices have risen by around 10% nationally with hot-spots seeing even bigger rises. There is a lack of new stock and it's certainly a sellers market right now.
The Chancellor's stamp duty holiday has meant there is no stamp duty tax to pay for first-time buyers and home movers on purchases priced at or below £500,000 before 30th June. The reduction offers buyers a potential saving of up to £15,000 when buying at £500k or above.
However, that's not the end of the story. Stamp Duty rates will continue to be reduced for a further 3 months until 30th September 2021. One holiday ends, but another begins.
From 1st July, there will be a staggered return to previous stamp duty rates, with the nil-rate band lowered from £500,000 to £250,000 until the end of September. This represents a saving of £2,500 for someone buying at a property at £250,000 - and for the Island, with an average house price of £294,633 (data from Zoopla), that represents almost the same saving as before for many local buyers.
From 1st October, the nil rate band will return to £125,000 and it seems unlikely that there will be any further concessions or reductions in the near future.
What does this mean for the market?
Here at Trigg & Co, the Isle of Wight's top selling estate agency office, we see some welcome cooling off in the sales market from the current frentic pace which is unsustainable, but believe the market will remain strong for sellers. The extended stamp duty concessions will propel the market into the Autumn which is traditionally a strong time for sales, and with the likely ending of Covid restrictions in late July, this should also give the market added momentum.
The amount of stamp duty tax you pay depends on whether you are a first time buyer, a house mover or an investor. Here is a quick link to the Government stamp duty page which sets out everything you need to know about this (very unpopular) tax on moving:
Stamp Duty Land Tax - GOV.UK (www.gov.uk).
For those people who find Government web pages quite hard going, we have a handy stamp duty calculator, moving costs and mortgage guide on our website which you can find here:
Island prices have shown very strong growth in the last year, with values up more than 14% based on Zoopla data.
Your own property may well be worth considerably more than you think.
If you are thinking about a possible move, home extension. re-mortgage or are simply just curious, why not give us a call and get a free valuation from one of our expert valuers? If you are planning a move, you certainly haven't missed the boat.
As we said at the beginning of this article, one holiday is ending, but another is just beginning.