As predicted in our April blog, millions adapted to working from home throughout the UK national lockdown period. Online skills have increased for more of us so that we are able to work easily from home via the virtual world. The lockdown period proved sufficiently long enough to force proactive change in the way we all work and learn so that the wheels of commerce and education were able to continue turning. The recent easing of lockdown cannot now create a complete reversal to what we knew as “normal”.
We have not seen a fall in property prices in the Norfolk area despite such predictions. Considering the rapid shift to relocating to the countryside we still feel that a rapid rise in prices beyond the levels seen before the pandemic is not far off.
To help maintain a good balance and to keep the wheels turning smoothly, a steady flow of new property sellers are needed for the market. A steady flow, rather than a surge is of course preferable for market stability and consistency.
Anyone purchasing a primary residential home from 8 July 2020 until 31 March 2021, up to the value of £500,000, will now be exempt from paying Stamp Duty. In addition, the Nationwide Building Society are bringing back attractive 90% mortgage offers (no doubt with more lenders following suit). These exciting developments reiterates our view that NOW is a great time to buy or sell. Buyers save on tax and first-time buyers in particular are getting a real opportunity to jump on to the housing market with the benefit of no Stamp Duty costs and more accessible mortgage deals than seen for a little while. Sellers have been seeing motivated buyers since the market reopened for business and there is no sign of any slowdown.
All of this offers a feelgood boost to the property market and bodes well for a stable property market in 2021 if balance can be sustained from both buying and selling perspectives.
If the balance is not maintained then a false increase in property prices is probable, fuelled by growing demand outstripping supply. In such a market, buyers will be forced to overstretch their budgets to land the house they want only to find they are out of pocket following a slump after March/April 2021. The worst case scenario is that there will be a significant flurry of transactions in the first quarter of 2021 followed by a slump from April 2021 as a response to too many vendors going to market in 2020 and a withdrawal of the Stamp Duty holiday.
The benefit of no Stamp Duty costs applies to all primary residential purchases during the Stamp Duty holiday period and it is irrelevant whether the buyer is a first-time buyer or they have bought and sold countless times. The only requirement is that the property will be their main residence. Those fortunate enough to be able to buy over the £500,000 threshold will incur:
Prior to the changes, second home buyers had to pay a basic rate plus 3% SDLT but now they also get to benefit from the Stamp Duty holiday. Since the Stamp Duty holiday was announced second home buyers will pay a straight 3% over £40,000 up to the threshold value of £500,000 on their second home and:
These temporary changes will apply to corporations that look to buy residential property below the £500,000 threshold. In addition, corporate residential property purchases of any value which qualify under the relief criteria can also benefit from the corporate 15% SDLT which should encourage those who can to invest.
Popular opinion (science advisors too) says that the winter will see the UK hit by a second Covid19 wave. Bearing this in mind, it is perhaps wise for those wishing or needing to move to seize the day and make a move while they can. They currently have the opportunity to progress and complete a sale/purchase with a view to being settled by the autumn. In the event that we do see another lockdown, it is highly likely to be localised to affected areas rather than the whole of the UK shutdown entirely. Another point to remember is that lockdowns will be better managed as we have already adapted a great deal to the situation and everyone will be better prepared to cope with our “new normal” going forward.
However, it all plays out it will certainly be an interesting year ahead. In the meantime, you might like to refer to the UK government guidance on this.