Chancellor Rishi Sunak has announced a Stamp Duty holiday, raising the level at which the tax is charged to £500,000 of all property sales in England and Northern Ireland.
The tax threshold has been temporarily raised until next March to boost the property market and help buyers struggling because of the coronavirus crisis.
The changes have come in with immediate effect.
This means that you could now save thousands of pounds when purchasing your next home – making it the ideal time to buy
The average home currently costs £248,000 – with the changes announced you would save £2,460 in stamp duty costs when purchasing a home of this value. Anyone completing on a main residence costing up to £500,000 between 8 July and 31 March will not pay any stamp duty, and more expensive properties will only be taxed on their value above that amount.
Essentially, the more the property that you are buying is worth – up to £500,000 – the more you save, with potential savings of up to nearly £15,000 pounds. With the recent upsurge in property enquiries after the lockdown period, selling your property and finding your new home has never been easier.
UK PM vowed to “use this moment” to fix longstanding economic problems and promised a £5bn “new deal” to build homes and infrastructure.
In a wide-ranging speech in Dudley, in the West Midlands, Mr Johnson vowed to “build, build, build” to soften the “economic aftershock” of coronavirus.
He said the government wanted to continue with its plans to “level up” – one of its main slogans of last December’s election – as “too many parts” of the country had been “left behind, neglected, unloved”.
Infrastructure projects in England would be “accelerated” and there would be investment in new academy schools, green buses and new broadband, the PM added.
Projects in the £5bn investment plan include:
£1.5bn for hospital maintenance and building, eradicating mental health dormitories and improving A&E capacity – the government said this is “new” money in addition to £1.1bn in its Spring Budget
£100m for 29 road projects including bridge repairs in Sandwell and improving the A15 in the Humber region – this money had already been announced
Over £1bn for new school buildings, as announced on Monday – this cash comes from the government’s existing infrastructure plan
£12bn to help build 180,000 new affordable homes for ownership and rent over the next eight years – brings together three pots of money already announced by previous Tory governments and Mr Johnson’s administration
Other projects announced in the government’s Spring Budget, which will now be accelerated, include:
£83m for maintenance of prisons and youth offender facilities, and £60m for temporary prison places.
£900m for “shovel ready” local projects in England this year and in 2021
£500,000 – £1m for each area in the towns fund to spend on improvements to parks, high street and transport
Anyone taking advantage of the freeze must still pay back the debt at the end of the deferral period.
This has prompted debt charities to warn of the potential for individuals’ financial problems to simply be stored up for a later date.
The FCA said that if borrowers could resume their repayments they should do so, to avoid getting into more serious difficulty in the future. Banks may also be stricter in who qualifies for the payment deferral, and might only agree to a reduction in minimum repayments.
The regulator stressed that using the payment deferral should not affect a borrower’s credit rating. However, it warned that loan providers did have other ways to check on whether payment holidays had been taken, such as asking for bank statements, when making decisions on whether to agree to credit applications.
Although these extensions are currently proposals, banks only have until Monday to comment and the FCA expects the rules to be implemented soon after.
Help for people with car finance, payday loans, rent-to-own deals, pawnbroking, and buy-now-pay-later agreements will be updated by the regulator at a later date.
Most Banks are currently offering interest free overdraft up to a certain amount with reduced interest rate.
Check for details on your banks website. Most application can be done online.
The delay in completing a UK property sale several months and has been a big problem in the UK property industry. To solve this problem a blockchain-style platform has promises to double the speed of UK property sales, with the startup behind it announcing a new deal for its widespread use.
The deal with other software firms will give around half of UK estate agents access to new technology designed to tackle typical delays in property sales, according to ‘proptech’ firm Coadjute.
The firms chief executive Dan Salmons said home sales typically take months because of a lack of joined-up thinking and data-sharing among many stakeholders involved.
Confusion over next steps in a sale is common. Salmons said estate agents need “large armies” of workers merely to check for and pass on updates among parties, while buyers and sellers often have to complete similar forms multiple times.
Salmons acknowledges his firm is far from the first to promise to speed up sales by better connecting buyers, sellers, estate agents, conveyancers, lenders, government officials and others involved in transactions.
But he said previous efforts hit a wall as they sought to persuade all parties to use a single IT system. This can prove difficult to tailor to everyone’s needs, and poses privacy concerns with all data centralised. “People love new stuff, but they’re not good at giving up old stuff,” he added.
Britain’s Land Registry began exploring such technology in 2018, with trials held involving officials and conveyancers around the world who wished to tackle similar challenges.
The work sparked the launch of Coadjute, initially as Instant Property Network, as a participant in the trials. Salmons joined the startup after first getting involved in the experiments as Royal Bank of Scotland’s director of innovation for home buying.
It has since been working on its software and building interest, but Salmons said the pandemic had proved a turning point. The rise of remote working among estate agents, solicitors and others has sparked a “sudden demand for digitisation” in recent months, he said.
The UK has set itself a target of net zero greenhouse gas emissions by 2050, but that will be a challenge for the housing market.
As things stand, domestic housing accounts for nearly 20% of the UK’s carbon emissions. At the same time, there are few ‘green’ mortgage products and even fewer that have been set up to fund making homes more energy efficient.
This matters, because upgrading current buildings will be what helps cut emissions.
According to the UK Green Building Council, around 80% of the buildings that will exist in the UK in 2050 are already constructed.
Few of those are energy efficient. Based on the government’s energy performance certificates (EPC), most of the UK’s housing stock is in the middle, ‘D’, band.
Top of the list in making housing more energy efficient is cutting fuel use. Around 10% of the UK’s carbon footprint comes down to heating – mostly domestic heating.
In principle, green mortgages that help homeowners manage the cost of boosting energy efficiency should be widespread and keenly priced.
A recent survey from Estate Agents across England showed that house prices across the UK fell at the fastest rate since the financial crisis in May with potential buyers saying they would wait at least six months before returning to the housing market.
According to the report from the Nationwide Building Society, one of the UK’s largest mortgage lenders, the average price of a home dropped 1.7 per cent in May from the previous month to £218,902. This comes after April’s 0.9 per cent gain and is the biggest monthly fall since February 2009.
The figures came as the UK continues to lift its coronavirus lockdown, which has been in place since March. Last month, the government said construction sites could open if it were safe to do so, along with factories.
But the outlook for the housing market remains highly uncertain, said Robert Gardner, Nationwide’s chief economist. “Behavioural changes and social distancing are likely to impact the flow of housing transactions for some time,” he said.
Gardner said that would-be buyers are “now planning to wait six months on average before looking to enter the market.” The annual growth rate slowed to 1.8 per cent, down from 3.7 per cent in April and the slowest since December.
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Residential property sales in the UK in April hit their lowest monthly level since comparable records began in 2005, new figures show.
There were 38,060 transactions in April, according to provisional numbers from HM Revenue and Customs (HMRC).
This was less than half the level seen in the same month last year.
Spring is usually a busy period for the property market, but the coronavirus lockdown halted activity.
The government lifted many of these restrictions on the sector in England in mid-May. The total number of UK property sales is slightly less than the previous low when the taps were turned off in the property market at the height of the financial crisis in January 2009.
Economists and housing experts are forecasting UK-wide price falls of up to 13%, with “brutal” declines in some areas, as the property market struggles to rebuild during the coronavirus crisis.
The range of forecasts from the major researchers is markedly wider than usual. At one end is the Centre for Economics and Business Research, which predicts that 2020 prices will be down by 13% “as a lack of transactions, high uncertainty and falling incomes take their toll”. But the estate agent Savills said the hit to the market could be more like 5%, and a third of valuation surveyors are predicting that price falls may be limited to 4% or less.
The post-lockdown market will be a buyer’s market, said Jonathan Hopper of Garrington Property Finders, as he forecast falls of 10% nationally and 15% in some areas.
“Areas with a more resilient jobs market should see values hold up better, but elsewhere the price correction could be more brutal,” he said.
Knight Frank, in a revised forecast issued this week, said it anticipated a fall of 7% in 2020, more than its earlier forecast of 3%. Its analysis suggested prices had already fallen 5% since March, with a further downtick to come.
In England the February data shows, on average, house prices have fallen by 0.6% since January 2020. The annual price rise of 0.8% takes the average property value to £246,341.
The regional data for England indicates that:
the South West experienced the greatest monthly price rise, up by 0.5%
the East Midlands saw the most significant monthly price fall, down by 1%
London experienced the greatest annual price rise, up by 2.3%
the East of England saw the lowest annual price growth, down by 1%
UK house prices
UK house prices increased by 1.1% in the year to February 2020, down from 1.5% in January 2020. On a non-seasonally adjusted basis, average house prices in the UK decreased by 0.6% between January 2020 and February 2020, compared with a fall of 0.3% during the same period a year earlier (January 2019 and February 2019).
The UK Property Transactions Statistics for February 2020 showed that on a seasonally adjusted basis, the estimated number of transactions of residential properties with a value of £40,000 or greater was 103,870. This is 6% higher than a year ago. Between January 2020 and February 2020, transactions increased by 4.5%.
House price growth was strongest in Wales where prices increased by 3.4% over the year to February 2020, up from 2.5% in January 2020. The highest annual growth within the English regions was in London, where average house prices grew by 2.3%, this was due to a decrease in average house price between January 2019 and February 2019. The lowest, and only negative, annual growth was in the East of England, where prices decreased by 1% over the year to February 2020.