Stamp Duty Land Tax – The new temporary reduced rates explained

With immediate effect the new Stamp Duty Land Tax (SDLT) threshold of £500,000 will apply and will run until 31 March 2021. This means any buyer purchasing a primary residential property between 8 July 2020 and 31 March 2021, up to the value of £500,000, will be exempt of paying Stamp Duty.

According to the release by the Government the exemption will apply to all primary residential property purchases, so regardless of whether the purchaser is a first-time buyer or someone who has owned a property before.

This means that on purchases over the £500,000 threshold, buyers will pay a 5% SDLT on the portion from £500,001 to £925,000, 10% on the portion from £925,001 to £1.5 million and 12% on any portion over £1.5 million.

Visit gov.uk for more information

When it comes to purchasing a second home, the Government has introduced higher additional rates with a 3% higher rate on top of the new revised standards. For people purchasing a holiday home up to the threshold value of £500,000 they will pay 3% SDLT.  Those buying a second home over the threshold with pay 8% on the portion from £500,001 to £925,000, 13% on the portion from £925,001 to £1.5 million, and 15% on the remaining portion over £1.5 million.

Visit gov.uk for more information

At Joplings we have experienced an increase of valuations and new instructions with clients looking to take advantage of the savings that can be made by the reduction in Stamp Duty Land Tax.  Many buyers will not pay any  stamp duty when purchasing a property up to £500,000. This money could be used to purchase a new kitchen or bathroom suites for their new home.

To take advantage of this we believe you need to place your property on the market as soon as possible, ideally before the end of September to give yourself the best chance of selling before the 31st March 2021.

For a free valuation to see how much your property is worth contact us at our Thirsk or Ripon office.

Call us on 01845 522680 or 01765 694800 for further advice and information.

first time buyers

Guild Blog: How can first-time buyers get on the ladder faster?

Are you thinking of getting on the property ladder this year? It is often a daunting task, but interest rates are currently low and there are government schemes that can help, too. We asked Guild agents across the country for their advice to help more people buy their first home sooner.

Philip Jackson – Maguire Jackson, Birmingham 

  • “Do research on how much finance you can secure based on your current salary.
  • Know what deposit you need and what Help to Buy schemes (www.helptobuy.gov.uk)are available in your area.
  • Determine how much deposit you actually need, taking into account your purchasing costs.
  • Research exactly what your purchasing costs might be to your lawyer, your bank, and surveyor.
  • Work out where you want to live or indeed be comfortable living in that location.
  • Work out the time frame. Buying a property often takes longer than people imagine.
  • If your family is helping with a deposit, then make sure you give them plenty of warning as their capital may be tied up in a savings scheme that requires more notice than just one week or a one month.
  • Finally, it is more important that the deposit is large enough to help secure the property in the location you like.”

Jamie Bartholomew, Century Residential, London

“I often encourage people in rented accommodation to compromise on what they want in the short term to be able to purchase their own home. Once they buy a property, they can work on overpaying their mortgage, which will give them a larger deposit in the longer term. Often moving to a slightly more affordable area in the short term is the key.”

Katie Griffin, Sawde & Harris, Dartmoor

“We would like to see more pressure put on mortgage companies to offer products with higher loan to values which are specifically aimed at first-time buyers.  Personally, we do not see many new developments within Dartmoor or the Teign Valley, where we conduct a lot of our business. More targeted products to allow younger people to get on to the property ladder would be a massive boost for first-time buyers, too.”

first time buyers

Steve Thompson, Thomas Morris, St Neots

“In recent years, high property prices have made it difficult for first-time buyers to get on the housing ladder. Despite this, it is a good time to take the first step into property ownership. Mortgage interest rates are incredibly low at the moment and the government offer various schemes to enable first-time buyers to get on the ladder with a small deposit. These schemes include, Help to Buy options and shared ownership schemes. The advice of a good mortgage company is invaluable. Also first-time buyers will need a minimum deposit to get started aside from help from the “bank of Mum and Dad”. There really is no substitute for saving and starting early.”

James Millard, James Millard Estate Agent, Westerham

“What is my advice for a first-time buyer? Find your ‘inner estate agent’. It is essential that your first step is the right one. So you need to make sure that you buy your home for the right price. If you research the market properly, this will give you a head start when making an offer.”

Robbie Ridgeway, Hamilton property Services, Surrey

“We seem to think that it is harder now for first-time buyers to purchase a property than it was for our parents and their parents. I always feel that it has always been hard, in fact with the various government schemes and banks offering 95% mortgages, it could be argued that it is easier now than it has been for a very long time.  It is easier said than done but my advice for first time buyers is to spend less and save more.”

Jo Ryan, Gibbs Gillespie, Middlesex

  • “Make sure you are on the voters roll, even if you don’t want to vote.
  • Check your credit file.
  • Get a credit card, spend a small amount each month and then repay it immediately, it helps you build up a credit file profile and shows lenders you can handle credit responsibly.
  • Shared Ownership is the best scheme in our opinion.”

Steve Barron, Drivers & Norris, London

“We recommend people bide their time, save like crazy and keep an open mind regarding the type and exact location of the property. When ready to buy, think value-for-money and learn to get handy using power tools. Before committing, we also advise our buyers to factor-in all the buying costs including legal, repairs and of course block service charges.  Lastly, strict monthly budgeting and maybe even taking in a lodger can help soften the load.”

Simon Miller, Holroyd Miller, London

 “There are a few things first-time buyers should attend to before taking that first step onto the property ladder. Although the Internet, parents and friends are probably the first sources of advice be aware the advice isn’t necessarily relevant or correct. The first and most important piece of advice you can take is from an independent mortgage advisor. You may find you can afford the property you didn’t think was in your league, or adversely you may find you really don’t have the budget for the property you wanted. It is also important to research the area you’re looking to buy in.”

Can Boris change the Stamp Duty?

Guild Blog: Could Prime Minister, Boris make changes to Stamp Duty in the near future?

Many in the property industry have called out for the new Prime Minister, Boris Johnson, to act decisively on his previously proposed plan of possibly scrapping Stamp Duty on homes under £500,000, at the same time cutting it from 12% to 7% on properties valued at over £1.5m. The hope is the proposed changes would mitigate the potential negative impact of the recent political instability and would improve buyer confidence in the market.

In the past, Prime Minister Boris Johnson had said that he would potentially call for an emergency Budget meeting in September where he would implement changes to current Stamp Duty legislation and drastically raise the threshold to the aforementioned £500,000. Excessive Stamp Duty charges have long been a challenge for those on all levels of the housing ladder, so both buyers and sellers will now be eagerly awaiting confirmation on how he intends to address this.

Free up over 300,000 buyers from Stamp Duty

Should the proposed changes be made it would essentially free up over 300,000 property buyers from having to pay Stamp Duty, based on figures from 2018/2019. The number could even increase as sellers just over the threshold drop their price to entice interest. When you consider the homes sold that are already exempt, over 650,000 transactions from last year would not have had to pay the tax.

The change could mean that entire regions where the average price of property is below £500,000 would be lifted from paying Stamp Duty. This would boost transactions in these pockets of the market and assist with economic growth in these areas.

Possible switch from buyer to seller

Johnson had also said that he may switch the responsibility of paying the tax from buyers to sellers – a drastic move that would greatly benefit potential buyers. Taking Stamp Duty off the table for prospective buyers would be a huge advantage, particularly for those who are looking to upgrade to a larger home to meet their growing family needs.  However, the change would bring about a few issues. For example, someone who is currently selling their home would have paid Stamp Duty on it when they purchased it. With the proposed change, they would then have to pay it again when they sold. Essentially, this would equate to double taxation. Sellers may also push up their asking price in a bid to cover the additional Stamp Duty charge they would incur.

There is also the question of retirees who are selling to downsize. Selling a large home would mean paying higher levels of Stamp Duty, which would be a blow for someone planning for their golden years.

More buying power for first-time buyers

As it stands, buyers purchasing a home under £300,000 are exempt from paying Stamp Duty. The proposed increase in the threshold would give them the option to purchase a higher-priced home, while still being exempt. This is provided of course, they can afford a home over £300,000 and have the money for the deposit and other costs involved in purchasing a property. A study from the Royal Institution of Chartered Surveyors found that there had been no significant positive impact on property sales after the change in Stamp Duty in November 2018, so perhaps it is unlikely that any further change would bring more first-time buyers to the market.  That said, the number of first-time buyers continues to increase, which can be attributed to other aspects such as Help to Buy.

Get the market moving

The idea behind the proposed policies is to the get market moving in sectors below £500,000, as well as those at the top end. The hike in Stamp Duty for homes over £925,000 in November 2014, greatly effected the top tier of the market slowing it to a near standstill. Ever since, transactions in the upper end of the market have suffered. The proposed cut from 12% to 7% would do much to invigorate this end of the sector, even if only for a time.

Iain McKenzie, CEO of The Guild of Property Professionals, said he would welcome any positive move by the new Prime Minister on Stamp Duty and taxes on landlords. I am in favour of anyone who is going to improve sentiment or confidence in the housing market. Current economic data is strong, but the uncertainty of Brexit has caused stagnation in the market. Mr Johnson’s commitment to ‘deliver Brexit’ on 31st October with a new ‘can do’ spirit is therefore very much welcomed.”

While the changes are merely talk at the moment, should they come about, it will be intriguing to see what impact they will have on the market moving forward. For more information about the current Stamp Duty thresholds read our blog on the subject.

where to live

Guild Blog: Location, location, location: a guide to finding your next home

There is one thing that all property professionals agree on, whether they work in commercial property or residential, and it’s that location is one of the most important factors to consider when buying a home. Property gurus around the world continue to emphasise the importance of location because it has such a massive bearing on a property’s desirability and potential investment return.

There are several key elements to consider before making your final decision. If a location has more positive elements, than negative, it will be in higher demand and will have a greater potential resale value in the future.  Essentially, it comes down to desirability and whether buyers would want to live where the home is situated – there is a direct collation between demand and property prices.

Don’t compromise on location

There are a lot of buyers who focus on the property itself and perhaps compromise on where it is situated. However, when it comes to the appreciation potential of the home, this will end up hurting their back pocket. A home can be changed, updated or renovated, but you can’t alter its location. Therefore, it is always better to prioritise location and compromise on the property.

pins in a map

Development

A good location is where there is the potential for growth and development. The area needs to be able to support the demand for property over the long term and subsequently increase its value in time. However, bear in mind that certain developments can devalue a location, such as the construction of a power plant or dump within proximity to the home. Before purchasing in an area, find out about future development plans. Developments such as new industrial sites, new roads, or railways or even industrial activities can vastly alter the price profile of an area.

Investment and commercial activity

National retailers and property developers will do thorough market research before deciding to invest in an area. So, commercial activity, corporate investment and residential and commercial property developments, are all indicators that the area has the potential for strong investment returns. Also, the presence of long-established or well-known brands within the surrounds will indicate that there is a level of confidence that the area has good growth potential.

Infrastructure

The infrastructure in an area needs to accommodate the level of service required by its residents. Neglected areas that experience poor service delivery are not a good option. These areas can be distinguished by the upkeep of the general public land such as the parks, pavements and roads.

cycling in the park

Amenities

Another factor to consider is the quality of the amenities in the area. These include shopping and medical facilities, entertainment areas, restaurants, public services and outstanding schools. Convenience is a highly valued commodity.

Shopping Centre
View of the ceiling of the Hall of a beautiful vintage shopping center in England

Crimes levels

Properties in a high crime rate zone will not hold their value over time. Research from insurer Direct Line revealed that almost half of Brits would check crimes statistics in neighbourhoods they might live in, and 47% would not buy a home in an area with a high crime rate. Over a third said they would expect to pay less for a property in a high crime area.

To check the crime rates in an area, you can visit crime-statistics.co.uk/postcode or police.co.uk.

Transport

Accessibility to transport routes and train stations will also have an impact on an area’s appreciation potential. A large portion of the British population commute far distances every day to get to work, so easy access to public transport is a major consideration.

train station
Train on platform in station in London

The adage of location, location, location is as relevant today as it was when it first appeared in print in 1926. While finding the right home in the right location will require time and research, the future benefits of solid growth in the value of the property will certainly make it worthwhile.

Get in touch to find a home in the right location!

Here at The Guild, we can help you find a home in the right location. Simply contact us today to find out more, or visit our buyers guides on our website.

VR

Guild Blog: How Virtual Reality is changing the Property Sector

In today’s fast-moving technological age, new developments in tech are constantly being introduced that are having a significant impact on the property sector. The most recent is the introduction of virtual tours and virtual reality (VR).

While Virtual Reality (VR) is by no means a new concept, rapid advancement in augmented reality technology has meant that it is now at the point of having an impact on consumers’ day-to-day lives.

What differentiates virtual reality from augmented reality?  

Augmented reality provides an additional layer of 3D content to the user’s actual surroundings, while VR fully submerges the user into a created environment and virtual world. By wearing a headset, the user is transported to another place offering them a 360-degree view of their simulated surroundings.

According to statistics, around 95% of home buyers use the internet as their initial search method when looking for a property, with approximately half of buyers purchasing a home that they found online. The integration of VR is adding to the experience and making it far easier.

What are the benefits of virtual reality?

The applications of VR within the property sector are limitless and it offers benefits to both estate agents and their clients. With most people viewing between five and seven homes before they make an offer, VR can save a lot of time and money.

It will also make it far easier to look for homes in other parts of the country or abroad without the need to travel. Buyers can virtually tour multiple properties from the comfort of their own home in a matter of minutes. The process will allow potential buyers to check through several properties and quickly narrow down the field to a few choice homes that they would like to take a second look at in person.

VR can also be an excellent tool for new build developments when the property has not yet been built. A virtual tour will turn imagination into reality, offering the potential buyer a look into what the home will look like once it is finished. Buyers will be able to view an off-plan property, make comments or suggestions and get an idea of the space and how it works before ground has been broken.

Although the majority of people have heard of VR, not everyone has had the privilege of actually experiencing it first-hand. While the technology is in place, it will still be a while before we see everyone searching for a property this way. However, that said, it is becoming more mainstream and accessible and there are already elements of VR that are already being used by the general public, such as Google Street View, which allows the user to visit city and suburb streets that they have never actually set foot on. VR headsets are also becoming far more commonplace in many households.

What can we expect from virtual reality in the future? 

Technology commentators say that in the near future we will see the introduction of haptic or kinaesthetic communication to VR. Using forces and sensations, the technology will replicate the sense of touch and allow users to see their hands in the virtual world. The user will be able to open doors and cupboards, interacting with their virtual surroundings when viewing a property.

Further developments are also being made to introduce the other senses into the VR world as well,  such as smell and taste. During a VR viewing, the buyer will be able to smell the freshly brewed coffee or baking cookies, which will have a subconscious effect on their opinion of the property. These aspects could be used to simulate the same emotional response in buyers, as they would if used in home staging during a viewing in person.

However, even with the advancement in technology and possible application, it remains to be seen whether the virtual world will ever truly rival the actual experience of shopping for a home in person.

Search for a property online today!

If you are looking for a new property, let us help you.

Head over to our website to start your property search today or view our property valuation tools!