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Stamp duty changes were made by the government this year in a bid to spur demand and support the economy. In mid-2020, Rishi Sunak announced no stamp duty would be charged on property purchased up to £500,000, which reportedly was set to save would-be buyers thousands.
According to the latest data released by HMRC today, it is evident the efforts have paid off to a certain extent.
HMRC unveiled the following statistics:
- Total SDLT transactions in Q3 2020 (July to September) were 68 percent higher than in Q2 2020 as a result of the easing of the COVID-19 lockdown measures and the introduction of the residential SDLT holiday
- Total SDLT transactions in Q3 2020 18 percent lower than in Q3 2019, mainly due to the impacts of COVID-19.
- Residential property transactions in Q3 2020 were 72 percent higher than in Q2 2020 and 18 percent lower than in Q3 2019.
- Non-residential property transactions in Q3 2020 was 38 percent higher than in Q2 2020 and 18 percent lower than in Q3 2019.
- Total SDLT receipts in Q3 2020 were 27 percent higher than in Q2 2020 due to the easing of the lockdown measures. The introduction of the residential stamp duty holiday will have reduced SDLT receipts.
Andy Sommerville, a Director at Search Acumen, commented on the results: “Although the Stamp Duty threshold has been raised, meaning fewer properties are being caught by the tax, high levels of buyer activity has maintained a healthy stream of receipts for the Government.
“Sharp rises in house prices since the reopening of the property market has partially offset the reduction in lower valued properties liable for SDLT.
“Upward pressure on prices for properties that were priced below £500,000 before the adjustment has pushed them above the new threshold.
“Properties valued around the £500,000 mark are often larger and have access to green space – especially outside of cities.
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“These types of homes are experiencing a sharp inflow in buyer interest, largely driven by the rapid adoption of remote working and shifts in work life balances prompting consumers to reassess their housing needs.
“Overall price rises are also topping up the Government’s tax take from SDLT.”
However, while the government’s efforts have worked well thus far, the demand is creating a corresponding problem with supply and time may be running out for those still looking to take advantage.
As Andy continued: “At the same time, those involved in the transaction process are struggling to clear a backlog of inquiries, putting many at risk of missing out on the Stamp Duty holiday before it reverts back to normal.”
Stamp duty rules are set to return to normal from March 31 but many experts and organisations have called on the state to extend the support.
These wishes are also shared among buyers themselves, as according to MoneySuperMarket, 71 percent of British people would like the government to extend the scheme beyond March 2021 so they can take advantage of it.
Additionally, should it not be extended, 60 percent would intentionally change their buying plans, with a quarter of buyers (24 percent) revealing they would withdraw from the market completely.
Emma Harvey, a director of mortgages at MoneySuperMarket, called on the government to commit to recent proposals in light of this: “While the stamp duty holiday has brought buyers to the market and lenders have never been busier, challenges still exist for those seeking to buy their first home – not least with regards to the availability of appropriate mortgages.
“This is why the government is proposing new measures to increase the availability of mortgages for those with a five percent deposit and we look forward to seeing these proposals in greater detail.”
These measures Emma referred to revolve around the pledges Boris Johnson made in early October, where the Prime Minister cowed to turn “generation rent into generation buy”.
As Boris confirmed during a conservative conference speech: “We need now to take forward one of the key proposals of our manifesto of 2019: giving young, first-time buyers the chance to take out a long-term, fixed-rate mortgage of up to 95 percent of the value of the home – vastly reducing the size of the deposit.
“We believe that this policy could create two million more owner-occupiers – the biggest expansion of home ownership since the 1980s.
“We will help turn generation rent into generation buy.”
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