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The Stamp Duty Land Tax Holiday, that saw no extra payments on up to £500,000 of purchase, ended on June 30. The new threshold had been halved to £250,000 until September 30, and, from October 1, 2021, the figure returned to the standard rate of £125,000.

Who would want to buy a property during the pandemic? Many of us have been staying at home, where possible, simply trying to adapt to the ever-changing nature of our world. The last thing on the mind of many was whether or not to upgrade their home! Invariably, the situation prompted an intervention from Rishi Sunak. The £500,000 stamp was a manuevoure to incentivise a panicked market and it seems to have worked.

The Times reported that the average UK house price increased by approximately £20,000 from April 2020 to April 2021, finishing at £251,000. This went against forecasts made by the Bank of England in May 2020, predicting a 16% fall in prices as a result of the pandemic.

First-time buyers and existing owners have driven the price of houses up because they want to avoid extra Stamp Duty tax payments on top of their purchases. Sunak’s measure created competition in a dead market and, thus, we saw a price hike as opposed to the expected fall.

Homeowners were still on the market for houses and they were trying to take advantage of those temporary benefits. However, the fall to the normal rate could lead to a drop in the average house price, given the incentives for buyers would no longer be present.

Stamp Duty incentives?

Mortgage rates are also low and this is designed to incentivise buyers. The Times notes how the government’s new scheme of a 5% deposit mortgage will open the market to a whole host of new buyers. It gives an option to many people who wouldn’t have initially had a low credit rating or a lack of money to put down for a deposit.

There are a number of stipulations that a buyer must pass before they are entitled to this government scheme.

The Equity Loan scheme that was recently introduced by the government, bidding to entice in new property buyers with poor credit scores. This scheme will run until March 2023. It is designed to open up the housing market to first-time buyers who are unable to make a sufficient deposit on a house.

It’s worth clarifying that this opportunity is only available to first-time homebuyers who are over the age of 18.

It is possible to get a mortgage while you are in an IVA but there are some extra problems to overcome. Firstly, an IVA negatively affects your credit rating and, as a result, it could be difficult to find a mortgage broker.

Each mortgage application is unique so you shouldn’t rule anything out. A mortgage application will look at:

  • Disposable income
  • Affordability
  • Credit history

Invariably, seeing the stamp duty tax return to normal will make life more difficult for those trying to get their first home. However, there are schemes in place to counter the difficult financial situation that the world continues to find itself in, and mortgage lenders are as eager as ever to work with prospective buyers.

The new landscape

We are unlikely to see dramatic changes to the Stamp Duty tax thresholds over the coming years and this could lead to a drop in the profitability of the housing market. Inflation is at a ten-year high, with energy costs set to rise astronomically in the coming months. This means that new buyers will now be more up against it than they have ever been before and that means property developers and sellers might need to think outside the box if they want to generate money.

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