The Autumn Statement & Stamp Duty
November 18th, 2022
Yesterday the Chancellor reversed the plan to permanently raise the stamp duty threshold to £250,000 and announced that this ‘tax break’ will now end in March 2025.
What does this mean?
In September, during the ill fated and disastrous mini budget set by Kwasi Kwarteng and Liz Truss, the government raised the nil rate threshold of SDLT (stamp duty land tax) from £125,000 to £250,000 for residential buyers in England.
It also increased the threshold paid by first time buyers to £425,000 amongst other things.
This basically meant that most buyers benefitted to the tune of £2,500 by not paying the 2% tax between £125,000 and £250,000.
This provided a timely boost to the property market as it was beginning to show signs of a dip due to rising inflation and cost of living generally.
What has changed?
Our new Chancellor has now decided that the above changes will now only be a temporary change and he will ‘sunset the measure’ (a great phrase I thought!) on 31st March 2025.
He says that this measure will create an incentive to support the housing market and boost transactions at a time when the market and economy needs it.
Will it cause much of an issue?
In all honesty? I don’t think it will affect buyers too much.
Yes, buyers will have to find the £2,500 again but as most transactions are made by people selling their homes and buying onwards, their deposits will come from the increase in equity their houses have made over the last few years and so will their SDLT payments.
In all likelihood, there will probably still be an incentive for first time buyers after 2025 anyway.
Cliff edge issues
However, I think the change may create another ‘cliff edge’ in the market in March 2025 though. You may remember the issues suffered by the industry in 2021 when the Covid stamp duty holiday ended?
At that point, to give the housing market a boost and to increase transaction levels, the government introduced a similar holiday SDLT which ended on 31st September 2021. This created a massive bottleneck in the market, raised prices and ended in tears when conveyancers couldn’t cope with the volume of transactions going through – in all honesty, the legal industry still hasn’t recovered from it.
Buyers missed out on the deadline and had to pay the extra stamp duty, some buyers couldn’t afford it and withdrew, some asked for price reductions which further delayed transactions and it generally caused chaos for everyone with it’ s knock on effects for removals, surveyors, estate agents and the rest of the industry.
So what can we do to help avoid this situation?
Well, this is simple – MOVE NOW!
Joking aside, start planning your move today. If you are thinking that you want to move next year or the year after, give yourself time to get it done before the end of 2024.
It may seem a long time away, but with properties taking longer to sell (it used to take 10-12 weeks to get from listing to sale agreed, and then another 12 weeks to get from sale agreed to moving day), now it is taking an average 150 days (according to Rightmove) just to get from sale agreed to moving day so you need to assume that moving will take between 6 and 9 months from the day you decided to put it on the market.
Also, choose a property professional carefully:
Firstly, choose an experienced estate agent who knows the market and knows how to progress a transaction from start to finish. There are so many agents who are great at getting your instruction to market their property, but don’t know what to do when it doesn’t sell or if there are issues with your sale.
Secondly, research your conveyancer carefully. Don’t just go for the cheapest, no sale-no fee conveyancer – it’s a false economy and will end in tears, stress and no move. Ask for recommendations from multiple sources, choose one who you can speak to. General rule of thumb: if you ask for a quote and they don’t pick up the phone to speak with you – don’t bother, find another. You need to be able to call them and speak with them throughout the transaction so issues can be dealt with properly.
For property advice, marketing plans to sell and if you just want a general chat about your home – give me call or message me.
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