The property owners and property buyers have high expectations from the Stamp Duty Holiday that will end in March 2021. It is an innovative and potentially advantageous policy to benefit property owners and possible buyers. To learn more about the Stamp duty holiday it is important to know all the related concepts associated with it. In this way, it would be easier to find out how well can this concept help the possible buyers.
What is Stamp Duty?
If you are investing in the real estate business in England and Northern Ireland by buying any residential space or a piece of land you have to pay a special tax called Stamp Duty. the government has eased the rate of this stamp duty by announcing a new policy back in July 2020. Under this, all those who will buy the property until March 31, 2021, will be exempted from the Stamp Duty on the properties that may cost up to £500,000.
If the property costs more than £500,000 then the stamp duty is based on the value of the property above £500,000.
For those investing in the second home, there is a stamp duty on any property that has a price over £40,000 at the revised rates along with an additional 3%.
Understanding the Stamp Duty Holiday
The concept of the Stamp Duty holiday was introduced on 8th July 2020. The purpose was to ease the property business. The holiday primarily applies to the transactions against the residential property by increasing the initial SDLT threshold from £125,000 to £500,000.
Impact of Stamp Duty holiday
The stamp duty is likely to impact three major players in the real estate business including home movers, first-time buyers, and property developers/ buy-to-let investors.
The Home Mover
The holiday has increased the rate of SDLT payment threshold regarding the residential purchases from £125,000 to £500,000. This threshold will apply provided that the process has completed between 8 July 2020 and 31 March 2021. The holiday allows the homeowners to increase or decrease the extent according to their personal needs. As a result, they can save up to £15,000.
The real estate is adversely impacted upon the real estate business. It is for this reason that SDLT was introduced. According to Spring Move, It is expected to boost the economy by offering better fluidity of the market. The stronger the market the more confident the consumer will be. It would in return be helpful for other markets.
It is important to remember that this SDLT has nothing to do with the non-residential and mixed-use properties. Hence, if you are getting a property and it has just one room that is for non-residential purposes then it would be of no help under the increased SDLT threshold.
The First-time Buyer
The holiday is of little use for first-time buyers. Prior to SDLT, the first time buyers were paying 0% SDLT on the first £300,000, 5% SDLT against an amount between £301,000 and £500,000, and on an amount of £500,000 full taxation rates.
First-time buyers were mostly exempted from SDLT before the holiday was announced. It was because the average price for the first time purchase in England was just £220,000. There is little incentive for first-time buyers on the holiday.
Developers And Buy-to-let Investors
Although the SDLT holiday has little to offer to the housing developers, as there is a rise in property purchases, therefore, there is a need for more housing developments.
The landlords and the individuals acquiring the additional properties are required to pay a surcharge of 3%. Anyone who invests in the additional property worth £500,000 is required to pay 3% on the first £125,000, 5% on the next £125,000, and 7% on the remaining £250,000. This means in total he has to pay 3% on the whole £500,000 purchase under the SDLT holiday. This shows that the liability will be £15,000, and so he can enjoy a saving of £15,000.
How To Buy The Home Before The Sdlt Holiday?
The average property purchase takes approximately 18 weeks. Thus, if we look at the time left at the end of the holiday it is not very far away. There are several reasons due to which the entire process gets time-consuming. Some of the common reasons include :
- Working in a chain-like procedure and waiting for the other members while selling the property.
- Delays due to time-consuming procedures like valuations, surveys, solicitor’s paperwork, or collecting signatures
- Queries and concerns regarding deeds, perimeters.
- Complex mortgage processes.
- Time-consuming negotiations
If you want to buy the home before the holiday period ends then here are the five essential steps that can help you.
Calculate Property Sales Tax
The property sale takes extra time due to undue delays in the financing. Mortgaging the property is not easy. It is a tedious and time-consuming task that can take extra weeks. It hardly happens that the bank releases the funds quickly. It is appropriate to choose an ideal broker who is independent, and experienced. Choose the deals that offer different types of mortgages. In this way, there is a chance of open access to every lender. Make sure that you manage your finances intelligently.
Before buying, complete the necessary surveys. Such surveys make sure that the mortgage is safe. In the case of certain properties valuations are handled on the basis of the desktop and so it does not need any physical appointment. This choice depends on the value and the type of property. The process can be quicker if you don’t wait much for the surveyor to check for the available slot.
Get Reasonable Valuation
It is very important to streamline this process. It is important for the mortgage provider to get the valuation. It is also important to check for the homebuyer’s survey. Combining the results of both of them would definitely save the necessary time and money.
Make sure that you book a slot with any surveyor. These specialized surveyors are always busy therefore it is important to get the space reserved hence you will not be waiting for your turn for weeks and the task will be accomplished without wasting your precious time.
Choose Good Estate Agent
Try going for chain-free properties and this can be done with the assistance of a good estate agent. The role of the good estate agent is very important especially when the seller wants a fast sale and there is a chain involved. It is very important for the buyer to get the ideal property, an Agreement in Principle, and surveys done in time. If you are in a chain it can be hectic especially if the other member of the chain intends to look for a home and sell it too. Although some chains are highly effective on the other hand if you want the things to take place prior to the end of the deadline then it is better to avoid the cumbersome chains.
Estimate the Budget
A home purchase may suffer unavoidable delays due to certain unavoidable circumstances like negotiations and then estimating the budget. It is very important to be pragmatic in your dealings. Make sure how much time you want for completing the entire process? The monetary value of the negotiations needs to be explored as well. The unnecessary arguments can delay the procedure too. If you are experiencing changes in the property with no planning or permission then it would be a matter of concern. In this case, the buyer has to wait for the existing owner until he gets the retrospective permission, or documentation prior to your willingness to move ahead. If the process requires more time the seller would take out the insurance against any potential enforcement action.
March is not too far. The deadline to avail of the holiday benefits is just around the corner. Therefore it is important to involve a solicitor or the conveyancer who can act fast and save precious time. Take all the solicitor-based actions well in time. Give him the right directions, pay the retainer in time, and then send them the confirmation. In this way, they can take a timely step and save your precious time. Shaving off the time can make things better for you. For getting the best services it is equally important to get a solicitor who has a good reputation, has sufficient knowledge, and is always ready to manage things well in time. Finally consider the buyer you are accepting an offer from, as buyers without a chain are able to move much quicker than those who are in one.
We want you to be on the safe side. It is for this reason that we are providing the necessary information that can be helpful in the future. We are offering tips that can benefit you in buying the home prior to the end of the deadline. The most important thing in managing the buying of the property is your personal traits. Being a vigilant buyer you need to be organized, proactive and diligent. It is important to take each step carefully so that you can get the ideal property at a reasonable cost and without wasting the essential time.
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