Stamp Duty Holiday Extended Until End of June – My Thoughts
Did you know that the government has extended the stamp duty holiday on property purchases for another three months? Well, now you know.
So what does this mean? If you're a first-time buyer, you are exempt from paying Stamp Duty Land Tax (SDLT) when you buy a house that's £500,000 or under until 30th June. And although eligible for the tax cut, investors and second-home buyers will pay a fixed 3% in stamp duty when purchasing property worth up to £500,000.
Now there are some disadvantages to this, depending on what side of the coin you are on. But personally, stamp duty continuing to be less for longer makes me generally pleased. Why? Over the last year, house prices have been booming, and many people have been making a lot of money.
On ‘Winners on a Wednesday', for instance, each week, I've had one of my students share their property success due to the housing market thriving. Mind you, businesses, in general, are not doing well, so really, the property market has been an exception. How long they keep extending the stamp duty holiday and the furlough scheme may depend on how long the lockdown lasts.
As it stands, all COVID-19 restrictions in England could end on 21st June. Remember, this is not a certainty. However, I imagine, until the lockdown gets lifted, the furlough scheme and stamp duty holiday will remain in place. And going by what has been happening since the pandemic began, the housing market will continue burgeoning.
Right now, a house listed on Rightmove sells within an average of 49 days. Note, this number was previously 67. Quick sales are great for both buyers and sellers. First-time buyers are also queuing up for properties, which can likely make it harder for investors to find deals right now. So it's no wonder there has been a lot of criticism over the stamp duty holiday.
But people criticize anything. They seem to forget that when the first lockdown happened in March 2020, people in the housing market couldn't even view houses. The sale of over half a million properties paused. It was honestly a nightmare; business was tough.
Thankfully, the government lifted the lockdown on the housing market. We could resume viewing houses as long as we followed the social distancing guidelines. And I've been doing just that. I've continued going to viewings and buying properties, which has seen me receive a lot of hate from certain people.
But as long as I stick to the rules, I don't see why it can't be business as usual, well to some extent. In fact, during the pandemic, we've been making loads of money. House sales have been going through like crazy, and there's just been a lot of buying and selling properties happening.
So yes, I'm excited that they extended the stamp duty holiday. For many of us in the housing market, this means there will be more boom and opportunities right up until the summer. So if you've been scared and hesitant to join, thinking these perks will soon end, you may as well get in now.
Now, back to the criticism. One of the reasons behind it is that while first-time buyers are saving on stamp duty, they're paying more for the houses because it's pushing the house prices up. For investors, house prices and rents going up is good because it means the market is booming, so I can buy properties.
But as previously mentioned, I've taken a lot of stick for buying houses during the pandemic, even from a political party! The Northern Independence Party has been bashing me on Twitter for buying and renting houses up north when I'm not a northerner. Why? They need to free the north. I'm sorry, but that doesn't make any sense to me for two reasons:
- I'm creating homes for people that want to rent affordable homes.
- I'm teaching and showing people how to do the same regardless of whether they're northerners or southerners.
So my goal is not to change the market or the economy. I'm just observing what's happening with both and establishing how I can make money on the back of it. And yes, all while following COVID-19 prevention and control guidelines. Correct me if I'm wrong, but isn't that what being an entrepreneur entails?
Another reason the stamp duty holiday was facing criticism was that some first-time homebuyers in the buying process were likely to close their deals past the deadline, which until recently, was 31st March. That would, of course, be disappointing, but if you ask me, not enough a reason to demand an extension. Because this is bound to happen again come 30th June. There will be buyers that won't meet the deadline.
So there's a lot of controversy and conversation surrounding stamp duty holiday online. But I'm pleased the government extended it as it will keep the market thriving, which as an investor, provides an advantage. I am personally in the process of developing a piece of land in Leeds, where we hope to build some houses and apartments. Consequently, if the market keeps going up, it's a good thing for me.
However, for someone not ready to buy a house for another year or two, the stamp duty holiday might not be good news. Because by the time they enter the market, house prices will be high. Now, at some point, when both the furlough scheme and stamp duty holiday ends, there will be a dip in the market. I thought that would have already happened because I didn't imagine we'd still be in lockdown by now!
But sometime in the future, when the lockdown ends, there's going to be a dip in the market. It's going to happen. And this is always the case, pandemic or not. The property market goes up, it goes down, it goes up, it goes down. But overall, with time, the market will continue to go up because we are on a small island, there is a massive shortage of houses, and there's an overpopulation of people.
Don't wait to buy a house, instead buy a house and wait! Wait for the capital appreciation. But go about it smartly and correctly by getting trained and educated.
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