From the 8th July 2020 the government increased the threshold for Stamp Duty tax temporarily from £125,000 to £500,000 in a move that has clearly boosted the Housing Market. The cost of Stamp Duty has often added significantly to a property purchase. In the short term the threshold increase could make purchases more attainable.
Stamp Duty Land Tax (SDLT) has been around for a long time – nearly 350-years! And is used by the government to raise revenues. The threshold has been at £125,000 for a little while now, however the increase will be significant as covers a large percentage of properties in England & Ireland (where the tax applies). This is reported to be as much as 90% of the transactions that take place. SDLT still applies for properties sold in the £500,000 + range.
By supporting the housing economy, the government hopes to provide it a meaningful boost, driven entirely by the financial and economical challenges of the global pandemic. Rishi Sunak estimated that the average saving a buyer would realise being somewhere around £4,500. However, there are still challenges and this move alone will not make everything else work.
Mortgages are based on risk and could be harder to obtain, specifically as lenders take a sterner view in times of economic hardship. The level of lending has changed too, lenders are looking for larger deposits. Especially from first-time buyers and those employed in sectors worst hit by the pandemic. This could quickly swallow up the tax saving.
Interest and demand in properties is high. With the likes of Rightmove & Zoopla reporting significant increases in search traffic. This has created “interest” and some sense the market is moving – beyond the levels of backlog activity. With the wider interest, prices are generally holding firm, but also evidence of gazumping – the term used when a new buyer outbids a buyer who believed they were undertaking an agreed purchase.
Self-Storage has proven to be in its highest demand when the economy is at its most uncertain. Key drivers being flexibility of the service. When things cannot be orderly, a flexible alternative is essential – this is certainly where businesses such as ours fit in. Customers can rent varying sizes of storage unit as best suit their needs – changing the units if these needs change. They can store their old stuff, the stuff they are moving or use the unit to store the new items for the new home (or a combination of all three)