TAX PERK SPARKS HOMES BOOM
DEMAND for property has soared nearly 50 per cent as buyers make the most of Rishi Sunak’s stamp duty holiday.
Property portals and mortgage brokers report a surge in activity as buyers look to make savings of up to £15,000 from the tax break.
Demand for property and mortgages is rocketing as first-time buyers, home movers and buy-to-let investors look to grab a major tax saving before the stamp duty suspension expires on March 31, 2021.
The holiday applies to purchases of up to £500,000, which means nine out of 10 buyers should avoid the levy altogether.
The Chancellor announced the stamp duty holiday in last Wednesday’s mini-Budget, to get the economy moving again.
Housebuilders, estate agents, removals firms, tradespeople and home furnishing companies should all benefit from more sales.
Property portal Rightmove has reported a 49 per cent rise in demand for homes between £400,000 and £500,000 – just under the threshold at which stamp duty now applies.
Demand for more expensive properties has also increased, with a 40 per cent rise in inquiries for property of up to £750,000.
There was a 26 per cent increase for homes priced at £300,001 to £400,000, while homes priced below £300,000 saw the smallest rise in inquiries – just one per cent.
Rightmove’s commercial director Miles Shipside said demand is coming from people looking to see what they can afford or trading up to more expensive homes, as they now have more cash. He said: “This is going to help the mid-market the most, but all parts of a property chain are vital to keep the market moving.”
Milton Keynes, Watford, Harrow, Chelmsford and Ilford saw some of the biggest jumps in buyer inquiries.
Mr Shipside warned the surge in demand could come at the expense of first-time buyers, who face greater competition from buy-to-let investors and second homeowners.
First-time buyers were exempt from stamp duty up to £300,000 but have lost that relative advantage as stamp duty savings now apply to all. Online mortgage broker Trussle has also seen a surge in demand from buyers, with home loan applications up 40 per cent on last year.
Head of mortgages Miles Robinson called on lenders to match strong demand from first-time buyers, by relaunching higher loan-tovalue (LTV) deals again, after pulling most of them in the pandemic.
Most will only lend up to 85 per cent LTV which leaves first-time buyers needing a 15 per cent deposit. But Nationwide said it will reintroduce 90 per cent LTV deals for first-time buyers from Monday.
The stamp duty holiday applies in England and Northern Ireland.
But yesterday the Welsh Government announced a holiday from July 25 worth £2,450 on properties up to £250,000, restricted to homebuyers rather than investors.