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How much stamp duty do you need to pay for your new home
7 December 2020
Stamp Duty holiday has positive impact
The COVID-19 pandemic has had a significant impact on the property market, but latest figures indicate there are positive signs of growth following the introduction of the Stamp Duty holiday.
Property searches rise
Coinciding with the Stamp Duty cut July was the busiest month so far this year for mortgage searches. The largest rise occurred in the £500,000 - £1m region, with Stamp Duty savings making these properties more accessible. Remortgage levels have remained consistent with pre-lockdown levels and purchase levels have quadrupled. Searches from first-time buyers are also up.
House prices jump
On another positive note, house prices rose by 7.5% year-on-year in October bringing the average price to £250,457, according to data from Halifax.
Pent-up demand and a low supply of available homes, plus support from the Stamp Duty holiday, has helped to exert upwards pressure on house prices. This, along with a significant jump in mortgage approvals and signs that confidence is growing, suggests the immediate future for the housing market is looking brighter. However, Halifax also warned that looking further ahead, there is still much uncertainty around the lasting impact of the pandemic, particularly as government support measures come to an end.
Increasing interest from overseas
The Stamp Duty cut has also led to a surge in interest in the UK property market from overseas. In addition, many overseas buyers are looking to purchase property before the introduction of an extra 2% Stamp Duty surcharge for non-UK buyers in April 2021.
Throughout July, highly searched terms by mortgage advisers included ‘visas’, ‘expats not in the UK’ and ‘foreign income’. One in 22 residential searches related to a query for an applicant currently on a visa or an expat not based in the UK.
How the Stamp Duty holiday works
On 8 July, the threshold at which Stamp Duty became payable on properties was increased from £125,000 to £500,000. This means almost nine in 10 buyers will pay no Stamp Duty before the holiday ends on 31 March 2021.
For those purchasing properties the rates are as follows:
0% - £0 to £500,000
5% - The part from £500,001 to £925,000
10% - The part from £925,001 to £1.5m
12% - Anything above £1.5m
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
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Contrary to costs such as legal fees, estate agency fees or Stamp Duty, having your new home surveyed isn’t actually compulsory. However, with a property being the most expensive thing most of us will ever buy, the price of not having it checked by a surveyor could be devastating. If you buy a property for the seller’s asking price and later find it has serious defects, it’s too late to back out of the purchase or renegotiate a price with your seller. You’re also likely to find yourself paying out to rectify the fault – and probably a lot more than you would have paid for a survey in the first place! A survey to suit your needs There isn’t just one type of survey available – you can get different ones that range in cost, according to the kind of property you’re buying: Condition report What is it: a basic overview of the property that only highlights the most significant defects; it doesn’t go into detail. Suitable for: those buying a relatively new homes in good condition. Homebuyer report What is it: a more comprehensive survey that highlights obvious defects such as damp or subsidence. It will include advice on any necessary repairs or maintenance and may also include a valuation or an estimation of rebuild costs. However, it’s not an intrusive survey, meaning the surveyor will only be picking up on visible issues. Suitable for: those buying a standard property in a reasonable condition. Building survey What is it: the most comprehensive type of survey, which looks at the property’s structure and condition, lists any defects and advises on repair and maintenance work. Unlike a homebuyer report, this is a much more hands-on survey, so the surveyor will do things like going up in the loft or looking under floorboards or behind sofas. Suitable for: older or listed buildings, or properties that are in poor condition or have an unusual design or structure. But what if I’m buying a new build? Even though it’s tempting not to have a new build property surveyed, there can still be issues with new build homes that could be costly to repair. If you’re buying a new build, you’ll need a slightly different survey called a snagging survey. It identifies any defects with new build homes, from cosmetic issues to structural problems, which the developer will then have to fix within the two-year warranty period. We can help As a member of Openwork, we can refer you to our specialist Surveying Service, which offers access to a large network of approved surveyors across the UK. For your peace of mind, get in touch. Surveying is not regulated by the Financial Conduct Authority.
Get to know your SVR
When you get a mortgage the lenders will want to do some checks to confirm you have the income to pay the new mortgage and they will ask for documents from you. We work out from the documents you give us which lenders will lend you the new mortgage. We understand what lenders are looking for so we can put you in the best position. Get in touch and we will be happy to help.
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