Looks like the stamp duty holiday will be extended - https://news.sky.com/story/stamp-dut...ether-12227369
Looks like the stamp duty holiday will be extended - https://news.sky.com/story/stamp-dut...ether-12227369
Predictable but the wrong answer, unless it is tapered, which is still not clear
I'm now cautiously in favour of a continuation, as I suspect there is a big knock-on effect and trickle-down benefits in not seeing the collapse of the housing 'industry' - be it in newbuilds or resales.
Time will tell.
But nobody is predicting a collapse and the market will settle back whenever relief finishes, 3 months is just kicking the can. It could result in prices falling 10% in some cases over say a 24 month period, before starting to climb back again. Not ideal if you are leaving the property ladder, no major impact if you are moving and the big point is first time buyers have a chance of entering the market. Instead we will continue to see tax payer money used to artificially inflate house prices and ensure estate agents and solicitors continue to get lots of work, whilst house builders make super profits.
I dont believe stamp duty holidays have made it cheaper to buy. Sellers have just factored it in to their asking price. 20k reduction in stamp duty will be a 20k increase in price. Also sellers wont be worried about SD tax bands for the moment so they can ask what they like.Originally Posted by murkeywaters
Property prices wont really be affected until all the extra benefits/payments and covid freebies have finished. Then you will see some fireworks...
On the radio the other day they said the average saving using the stamp duty scheme was £11k and the avagerge price has gone up nearly £50k. The scheme was absolute nonsense.
The two things dont correlate, very high unemployment numbers, many employees on furlough, business' in the UK suffering due to Brexit and Covid, and then a rise in house prices because of this SDLT holiday.
Previously i thought there would be a drop in house prices, but now i think it may be a minimal drop or remain stagnant, and then fast forward a few years down the line they will start to increase once the economy has bounced back.
Also 5% mortgages for FTB's upto £600k - well thats just exacerbated the problem hasnt. Rather than moving i think i may just make an effort to run down my mortgage as soon as possible rather than put it into savings for a potential house refurb which may not be on the cards now.
I couldn't get my head around the surge in mortgage applications etc, but someone on this thread explained the reasoning.
With regard to paying off your mortgage - I wouldn't do that at the expense of having ready-access savings. (varies for people - but I like to have some funds just-in-case) - When they did Offset Mortgages, it was perfect for that.
I have given up trying to make sense of the housing market in this country. I always thought COVID would put the brakes on it but it seems demand is as strong as ever, and the government are clearly happy to support this at every turn. I can’t see anything changing anytime soon.
I agree with Wiley’s comment above - you just have to dive in and get on with it, especially if you are buying a home for yourself. Maybe they’ll be a dip in the short term but longer term it’ll recover
Yup the 5 percenters for FTB's are back once again, what could possibly go wrong.
The old advice re ready access savings was to have 6 months,or more ,worth of living costs/mortgage payments etc on hand and then consider paying down debt.
Last edited by Passenger; 16th March 2021 at 11:36.
There is some funds for just incase which was tied up with the savings - but with interest rates abysmally low - better off down paying the mortgage.
I always went on the premise of 3 months worth of income saved up in case you lost your job. 5% for FTB upto £600k, means you only have to put in £30k and take on a debt of over half a million quid and all for first time buyers! unless they are significantly earning over the average salary - theyre going to struggle.
I can see this going in the way of the US, student debt, ridiculous house prices and the rich getting richer (although some of that already happens here)!
Edit: a £600k mortgage with 10% down - so £540k debt will set you back around £2600/m over a 25 year period. Yikes. Beans on toast for life anyone?
Last edited by Estoril-5; 16th March 2021 at 11:54. Reason: Mortgage calc
Agreed. It's really not a good direction of travel.
Last edited by Passenger; 16th March 2021 at 15:17.
Good practical advice, we've always tried to do a bit of both at the same time on a monthly basis.
Even a £50pm overpayment saves you £3k in interest over 25 year years assuming 1.5% on £250k ending the term 17 months early.
Our rate is 1.36% on a 5 year fix and even then we're paying back £1.61 for every £1 borrowed. I know this is too simplistic and not accurate but I always see every £1 overpaid as 61p saved. It's not really accurate as we go for longer terms and overpay monthly in case the brown stuff hits the fan and we need a lower payment for a while. No difference between choosing a 30 year term and paying the 25 year repayments so long as you don't pay more than 10% in a year. Haven't needed to do this yet but does give a safety net.
Without the SDLT holiday - I wonder how many more in lots of constituent areas of house building/selling/buying/renovating etc - would have ended up being furloughed?
Perhaps the cost of the 'holiday' is not much more than furlough costs? It seems a possibility, to me?
That of course discounts what the short-term repercussions are to the inflation in house prices, and possibly rents for a lot of that market.
So - will the end result (by next February, say) be, that prices will have risen and suddenly crashed to pre covid levels or beyond?
Will rents come back down though? (assuming they rose)
The stamp duty holiday was the biggest con going, most are worse off because of it. The future buyers of our inflated properties are our kid's generation ...Zero Sum Game.
It's the same market manipulation that goes on in Australia to keep the heartland voters onside by making them feel wealthy through ever-increasing house prices. Significant immigration has been the main cause, I guess the stories above are what the Gov expected to keep blowing more air in the balloon.
Stamp duty holiday was a sensible move to keep the house market buoyant, we don't know what would've happened without it. I think it's sensible to continue with it under current circumstances and I don`t think it should be blamed for house price inflation. Lots of other factors are to blame for that.
Remember, a buoyant house market has other spin-offs that benefit employment. People move house and usually carry out some work, be it decorating, home improvements, sorting out the garden etc, this involves spending and often involves work for tradesmen.
Some of you will take any opportunity to find fault with the government, you're entitled to your political bias but don't fool us (or yourselves) into thinking you're making objective comment, these threads provide a chance for the frustrated political animals to blow hot air so I guess they serve a useful purpose.
House market is exactly that, it's a market that's based on what people will pay and affordability. Let's not overlook the influence of historically low interest rates, some of us have long memories and recall interest rates over 13% in the late 80s.
Quite so, my parents tell me at one point in 1989 they were paying £1200 a month on a 3 bed semi in Helston in Cornwall that they only had a £36000 25 year mortgage on which had been at £600 or so when they bought in 1985. I remember my mum sitting at the table and actually having to write a budget in a little book for bills well into 1990/91 - I've never had to do that in my life. I think people tend to forget that actually the dual income nature of modern families also means that house prices have ballooned. Mine and my wife's parents easily survived on just the dad's being the main earners until the eldest child was in secondary school in same the houses that we now need dual incomes and a decade of savings and equity to afford and if one of us loses a job then 50% of that persons income is the mortgage. This means that a couple earning £30k a year each are going to be offered a 4.5x mortgage of a maximum £270k straight out of the gate repaying £1200 a month over 25 years on a £300k property - how are single income or joint part time families ever supposed to compete?
I hate to say it, but you took advantage of it (as far as I'm aware anyway!), so of course you'd like it!
I'm a first-time buyer and have now had my only real transaction benefit removed, which is not paying SDLT (up to £300k anyway and I want to buy outside of an expensive area, so my exposure to it would've been minimal at best)... So now I have higher prices to contend with and need even more deposit than I did before, as lower LTV products aren't available; great, that's really aided me in this situation.
I can't wait for the holiday on it to be dropped, it'll bring reality back to the market. As has been mentioned several times, the saving is so small compared to the massive hike in prices, it's ludicrous.
Frankly I have no idea what to do in the current situation, I was banking on furlough and SDLT holiday ending soon and starting to look again then. I pulled out of my previous purchase due to COVID-issues, almost a year ago and despite saving a lot more since, feel further away from buying than ever!
Best of luck, it´s a pretty rigged game tbh...will the possible announcement of Govt. help for FTB´s, rumoured as being a return of some 95 percent mortgage availability- Govt to providing some form of insurance to lenders, so I´ve read, perhaps be of some benefit to you.
The market could use some reality but in reality it´s such a totemic issue to the British mind set, I don't think that's high on the agenda.
Last edited by Passenger; 2nd March 2021 at 16:19.
While I feel your aggravation, a drop in property prices will hurt some but benefit you, there is always winners and losers when it comes to anything going up and down.
Yes prices are inflated due to the SDLT but who is to say property will drop by a significant amount once the holiday ends?
If there was a 5% drop a £300k property would cost £285k, that 5% would not likely happen in the first month either and take several months of 1-2% reductions, then there is the delay for it to feed into the market, especially cities and towns outside London, I don’t see any big corrections happening for a long time.
If anything I’m thinking there maybe a good feeling/summer/vaccine/Covid gone asking prices bump..
Wrong!
I didn’t ‘ take advantage of it’, in a somewhat protracted transaction involving purchase of a property that came to market following bereavement, a process that got stalled owing to a legal dispute between the owners, I ended up saving around £2.5k. However, that’s scant consolation for having to pay £9k more than the price originally agreed with one party who subsequently found he couldn’t legally sell it. Other party played hardball over price as a matter of principle and we were caught in the middle, sometimes in life you have to suck it up and pay, this was one of those times. I sold my own house for slightly more owing to the slightly stronger market ( perhaps £3k more, possibly £5k) which also helped slightly, I see no point in dwelling on the money aspect because we’ve moved forward, its now history.
My views on the Stamp Duty holiday are not prejudiced by my own situation, in the grand scheme of things it made v. little difference. I do see the advantages in keeping the market buoyant but it sounds like it’s created unhealthy price inflation in some areas.
My advice to anyone who finds prices in the South too high is simple: move North and get value for money, you might even find you like it.
I still think there’s a risk of prices falling when the economic reality kicks in.
AHA thought it might.
Sounds like the CGT allowance might get chopped from 12, 500p.a. to just 2000 pa.
Last edited by Passenger; 24th February 2021 at 15:01.
Posting Permissions
Reply With Quote