The temporarily increased nil rate band to £500,000 for residential Stamp Duty Land Tax (SDLT) ended on 30 June 2021. It has now reduced to £250,000 until 30 September 2021 and will further reduce to £125,000 from 1 October 2021.
The latest Office for National Statistics (ONS) UK House Price Index shows the average value of a UK home increased by 13.2% from June 2020 to June 2021.
However, a report by the Resolution Foundation suggests that the rise in house prices has been fuelled by low interest rates and the ‘race for space’ as people move away from cities into rural areas, rather than by the stamp duty holiday.
The Resolution Foundation accepts that it is reasonable to expect at least part of the savings from any transaction tax holiday to be capitalised into house prices (an HMRC evaluation of the SDLT cut introduced for first-time buyers in wake of the financial crisis estimated that between 50% and 70% of the value fed through into higher house prices, for example).
But, it argues, if the cuts to transaction taxes have been the overwhelming driver of the house price trends observed over the past 12 months, you would expect to see higher growth in areas where the savings from the change in policy have been most significant as a share of the house price. Instead, prices have grown by more in those local authority areas where the average buyer experienced negligible, if any, savings as a result of a transaction tax holiday, compared with areas where far higher savings were achieved (13% in savings quintiles 1 and 2 compared to 7% in quintile 5).
The think tank also considered that the tax holiday was actually ‘wasteful’ for HMRC with the Exchequer losing around £4.4bn in taxes in England and Northern Ireland as a result, although the Treasury has said that the policy ‘saved jobs’ by ‘stimulating the housing market’.
The research found that 44% of respondents felt that the impact of Covid-19 has made living in a city less appealing with 10% of respondents having moved away from a city or urban area in the last 12 months and almost a quarter, 24%, no longer commuting into a city for work.
For the last few decades, the pace of price growth in UK cities far outstripped that of rural areas, but the rise in home working has caused house prices in rural areas to skyrocket due to the demand. According to the property site Rightmove, Wales has seen the biggest increase with a 2.3% rise in the last month and a 10.9% increase year-on-year.
The think tank stated that the trend of a ‘more attractive rural lifestyle’ looks set to continue.
|Initial Rate||Description||Subsequent Rate||Overall Cost For Comparison (APR)||Early Repayment Charge||Max Loan||Fee|
|0.84%||2 Year Fix||3.59%||3.10%||2% Year 1, 1% Year 2||£1m||£995|
|1.09%||2 Year Discount||3.99%||3.50%||None||£1m||£999|
|1.19%||2 Year Fix Offset||3.59%||3.20%||2% Year 1, 1% Year 2||£1m||£999|
|0.96%||5 Year Fix||3.54%||2.60%||5% Year 1, reducing by 1% annually to 1% in Year 5||£5m||£1,499|
A recent survey suggests nearly half of all portfolio landlords are looking to remortgage over the next twelve months and 30% of them intend to release equity. Our partners can assist with Buy to Let mortgages and ensure landlords choose the right products and their applications progress smoothly.
With over 700,000 maturing mortgage products during 2021 many homeowners will take the easy option and push the button for a product transfer direct with their existing lender. This advice may seem ‘free and easy’ but takes no account of your personal circumstances, future plans or affordability. Our partner can help in researching new products that may be better suited to your needs.
With the UK mortgage market still frothy, many estate agents will not allow viewings on the most desirable properties if there is a chain involved. One solution is let to buy, where an individual converts the existing property into an investment and takes out a buy to let mortgage. A standard residential mortgage can then be taken out on the new property with normal criteria, as long as the monthly rental easily covers the mortgage payments on the investment property.
Whether you are coming to the end of your mortgage product or keen to compare your current rate to the best available elsewhere, please contact your adviser who can put you in touch with our mortgage partners.
* Lending criteria restrictions apply to all products, always seek independent advice.
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Source: Professional Mortgage Services & Techlink.
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