Stamp Duty Land Tax (SDLT) is the tax payable when purchasing land in England and Northern Ireland. Different thresholds are applied depending on the purchase price of the property. The threshold for when SDLT starts to apply is currently £125,000, unless you’re a first time buyer or purchasing an additional property. When purchasing property below this value, as a home mover, there is no SDLT payable known and this is known as the nil rate band.
Stamp Duty Holiday
On the 8 July 2020, the temporary rates of SDLT came into effect. The temporary increase saw the nil rate band rise from £125,000 to £500,000. This increase in the nil rate band became known as the ‘Stamp Duty Holiday’. For thousands of people across the UK, this allowed them to purchase a higher value property and take the next step on the property ladder.
The holiday was introduced by the UK Government to encourage movement in the stagnant property market and to help buyers that had been financially hit by the impact of the Coronavirus. Before the holiday, movement and contact restrictions along with financial uncertainty left many buyers and sellers unable to move or look for a new home.
The SDLT holiday, and a lift in restrictions, brought a wave of fresh demand for properties leading in an increase in prices and competition. Rightmove recorded a market price increase of 7.6% compared to the previous year (https://www.rightmove.co.uk/news/content/uploads/2022/01/Rightmove-House-Price-Index-17th-January-FINAL.pdf).
On the 1 July 2021, the nil rate band was reduced from £500,000 to £250,000 and then reduced back to the current level of £125,000 on the 1 October 2021 bringing the SDLT holiday to an end.
My experience of the SDLT holiday
I joined Jacksons at the end of April 2021, working in the newbuild residential team in Newcastle. I did have previous experience of commercial conveyancing and family law, but this was my first residential property role. Joining the team at this critical time in the SDLT holiday was extremely challenging and busy. The team were working long hours to ensure that as many homebuyers made it through before the SDLT holiday deadline. I had a lot to learn and quickly! I soon realised how fast paced residential conveyancing could be with hundreds of clients all needing attention and reassurance with the deadline looming.
Even with the extreme pressure of the deadline, the team made me feel extremely welcome and no question was too small. With the help and support of the team, my knowledge developed quickly and I was able to help the team with the large workload. The team had to work long hours under strong pressure but it was worth it for every homebuyer that was able to move into their new property.
The residential property team across both offices managed to complete on hundreds of properties before the deadline, meaning hundreds of homebuyers secured their new homes before the deadline. The team set a new record for the amount of completions in a year.
House prices in 2022
With the end of the SDLT, and an increase in mortgage rates, many people predict the property market will fall this year. This fall, however, it is yet to be seen. With the average house prices still 9.5% higher than a year ago (https://www.rightmove.co.uk/news/house-price-index/) and Savills predicting that the house prices will continue to rise 13.1% by 2026. (https://www.savills.co.uk/research_articles/229130/320987-0). The continuing increase in price has been put down to the reduced number of properties entering the market and therefore increased market competition. Many properties currently entering the market are often sold within days of being listed and many are being sold for over the asking price.
However, some experts such as Dale Anderson, MD of Fabrik Invest, predict that house prices will continue to increase in 2022, but at a reduced rate in comparison to 2021 as he told Express.co.uk. (https://www.express.co.uk/life-style/property/1476577/UK-average-house-prices-region-2021-evg). On the 2 February 2022, the Bank of England increased the interest rate from 0.25% to 0.50%. This small increase could have a big effect on the property market as borrowing will be more expensive. This could reduce the number of mortgage applications and a slow down for movement on the market.
2022 will be a interesting year for the property market as it recovers from the SDLT holiday and faces new challenges such as increased mortgage rates, war in Ukraine, inflation and general uncertainty in the markets. For the time being the market remains strong and we continue to see an upward trend, here is to hoping this continues.
If you need help to buy/sell your home, then please contact our team on 0191 2322574/01642 356500 or email me at vblackham@jacksons-law.com
Victoria Blackham, Paralegal
