Golden Summer Ahead for Property Buyers Following Chancellor’s Statement
This week the Chancellor’s Summer Statement brought welcome good news to the UK property market, signalling the start of a bounce-back in sector recovery. The UK government plans are all about growth, confidence and recovery as we emerge from the Coronavirus lockdown and look to the future.
Let’s take a look at the highlights, what this means for West Sussex property buyers and sellers, and why this year may just be the perfect time to make that move!
What is the Chancellor’s Address?
If you haven’t heard of the summer statement before, you’re not alone! This is a one-off outside of the usual governmental schedule of policy and budget announcements, owing to the disruption that the pandemic has brought across the country.
Rishi Sunak is the Chancellor of the Exchequer, responsible for public spending, taxation and borrowing. Sunak acts as the chief financial minister to the UK government and has over-riding responsibility for the treasury.
The Statement introduces a £30 billion fund, designed to stimulate rapid recovery. This covers a broad spectrum of UK infrastructure, looking at ways to boost employment, help businesses get back on their feet and support people who have been financially affected by Covid-19.
UK Stamp Duty Holidays
Stamp duty (also known as Stamp Duty Land Tax) is the tax payable when you buy property over a particular value. Currently, you don’t need to pay any stamp duty if your property is costing less than £125,000. There are also exemptions for first-time buyers, although it depends on the value of the property.
Starting from 8th July 2020 until 31st March 2021, the threshold at which stamp duty is payable rises from £125,000 to £500,000. Rates for properties sold at over and above £500,000 are only liable for stamp duty for the proportion of the cost over and above this new limit.
With much speculation about how the government will support UK property buyers and sellers, this comes as great news for both buyers and sellers who have been impacted by lockdown, and looks set to provide a platform for a rapid rebound for the property market!
Green Homes Grant Scheme
Another important announcement for West Sussex property owners is the Green Home Grant Scheme, which will assist homeowners with making improvements to their houses to cut energy bills and make properties more energy efficient.
This scheme will deliver vouchers of up to £5,000 in value, with the government paying around two-thirds of home improvement costs. Funding can apply to all sorts of projects, from insulation and even rumours of new boilers to low-energy lighting, this is yet to be fully confirmed.
As well as these initiatives to support property buyers and homeowners, the announcement includes a variety of funding directives aimed at getting the UK back on its feet.
While the Green Homes Grant Scheme pledges up to £5k of support, this will extend up to £10k for low-income households.
Social housing will also see an enormous budget allocation coming its way, with a £50 million ‘decarbonisation fund’ to help landlords and managers upgrade social housing making it more energy-efficient, and ultimately cheaper to heat and run.
For homeowners who have been considering selling, but have held off due to the cost of improvements, this is a prime time to upgrade for a fraction of the cost, in a seller’s market with the stamp duty holiday making it cheaper than ever for buyers to purchase your property.
What makes it so appealing is that this sort of support has never been seen before, and for property buyers represents a golden opportunity to move forward with relocation plans at a substantial cost saving – but only for a limited time.
Property Owner Factors – The Detail
It’s all too easy to read an announcement and get excited; only to find out it doesn’t apply to you.
So let’s break it down to see how these measures impact you, and what sort of timescales we are talking about.
Stamp Duty Holidays:
- Start immediately from 8th July 2020, and last until 31st March 2021
- Apply to all residential property purchases that complete in this period
- The completion date must fall within those dates to be eligible
- Landlords and investors benefit, but are still liable for the additional 3% levy
- Buyers of second homes are eligible for these reduced rates, but are also still required to pay the 3% additional tax
In effect – property purchases are now tax-free up to the value of £500,000 for the next nine months, which will make moving home now far more cost-effective than ever before!
As it stands, the scheme will end on 31st March 2021, so if you’re thinking of moving home in the next few months, we strongly recommend getting the ball rolling now – as the completion date must be before then to be eligible for the exemption.
How Much Will the Stamp Duty Holiday Save You?
The previous stamp duty payable for a property over the £125k threshold was 2% up to £250k, and 5% up to £500k – which can add a big whack to your budget on top of the cost of buying a new home!
Raising that threshold to £500,000 means that everybody who buys a property now will save up to £15,000 in taxes, so this is a massive incentive to buy that Chichester property now!
For example, a property costing £700,000 will now incur stamp duty of £10,000 – compared to £25,000 under the old rules. Property costing £1.1m will cost a stamp duty tax of £38,750, a huge drop from the previous rates of £53,750.
The scheme comes into effect immediately from 8th July and will last until 31st March 2021. Sunak estimates that nine of ten property buyers in this period will pay zero stamp duty.
Green Homes Grants:
- Starts from September 2020.
- Eligible for applications of two thirds and above of the cost.
- Applies to homeowners within certain income thresholds.
The home improvement projects that fall within this fund have to be all about energy efficiency – and will support rates of work and employment in those sectors as well as being a help for homeowners looking to make upgrades, but with budgets to balance. That means that you can’t get a grant for general redecoration – but if you’re looking at replacing an old boiler, installing double-glazing, or insulating your home, you can have a big chunk of that cost paid for.
How Are Green Homes Grants Funds Issued?
Funds are issued as a voucher, once the proposed work has been approved. Eligibility depends on your household income, how many dependents you look after, and any other form of income support you might currently be receiving.
As an example, if you’d like to insulate your home and the work will cost £4,000, you will need to pay somewhere around £1,320, with the rest of the cost paid for by the scheme.
Landlords are also in line for help here and may be able to apply for higher proportions of property upgrade costs. Everyone benefits, with more work for contractors, lower energy bills for tenants, and better quality homes for property renters.
Key Information for West Sussex Property Buyers
In a nutshell, Chichester properties are available at heavily-reduced taxation rates for the next nine months – this means buying a property now is a significantly cheaper prospect. This applies to all residential properties, of all values, and stamp duty costs have dropped sharply even for purchases of second homes.
We anticipate the market quickly reaching new heights, where sellers look to take advantage of this opportune time to sell, and buyers move to relocate while such enormous savings are available.
For landlords and existing homeowners, these new grant schemes and support programmes offer an attractive opportunity to upgrade and re-vamp properties. It is always worth bearing in mind the value of a high energy-efficiency certificate on a property, and how appealing this is to buyers who can make a tangible long-term saving in the cost of running their home!
Tod Anstee Ltd is one of the largest and most experienced firms of independent property consultants in Chichester and West Sussex. If you would like dedicated support and assistance with finding ideal Chichester properties to suit your budget or list a West Sussex property for sale while the stamp duty holiday is available, get in touch with our friendly team and let us help you get the ball rolling! All our website sales listings include a link to a helpful stamp duty calculator to help you calculate costs!