Posted on 7.1.16 by Matthew Owen
2015 was undoubtedly a good year for residential property with house-hunters growing in numbers and prices escalating throughout the year. The November Housing Market Report from the National Association of Estate Agents’ (NAEA) showed that the number of aspiring homeowners grew by 20% in comparison to the previous month.
First Time Buyers – the hand gives but might also take
However, there are a few caveats to consider as what’s good for some, isn’t necessarily good for others. With 10 prospective buyers for each house sellers are rubbing their hands together, whereas buyers are pulling their hair out, especially first time buyers (FTBs), where the number of sales dropped by 10%. With so much competition currently and the average UK house price now 4.5% higher than this time last year at £197,000 (NAEA), FTBs are simply being priced out of the market.
Nevertheless, FTBs shouldn’t despair just yet. The positive news is that the start of December saw the launch of the government’s flagship Help to Buy ISA initiative, which added another string to the Help to Buy bow. Although it is likely to be at least 6 months before the ISA initiative begins to show fruition, due to the limited amount of money a FTB can deposit into the account, it’s a step in the right direction. Also positive is that the latest Bank of England money and credit figures show that loan approvals for house purchases are consistent, with even a slight increase being shown in November compared to the previous six months. Furthermore Stamp Duty Land Tax is set to change from 1st April 2016 for those who already own a home, which may give an advantage to those not yet on the ladder.
If prices continue to rise and interest rates rise later in the year, it’s possible that there will be more cons than pros for FTBs. One thing the government has promised is to build more houses; 200,000 in fact by 2020. The Housing and Planning Bill is currently meandering its way through parliament, where upon approval, FTBs under the age of 40 will be offered a 20% discount on the asking price of these ‘Starter Homes’. Just this week David Cameron said the government are ‘rolling its sleeves up’ when it comes to building houses, giving a little more detail of where these 200,000 homes are going to come from:
- 13,000 new homes to be ‘directly commissioned’ on public land, 40% of which will be affordable starter homes.
- £1.2 billion to be allocated to the Starter Homes Fund which will help to build 30,000 homes on brownfield sites.
Homeowners – buoyant market but stamp duty changes to come in
If you are already a homeowner and thinking about selling up, there’s no better time than now to put your property on the market and watch the bidding war commence. Even more so when it’s considered that the Chancellor will announce Stamp Duty Land Tax changes for second homeowners on deals not completed before 1st April 2016.
Naturally when someone purchases a second home, they do so under a buy-to-let agreement. Any buyer who does this from 1st April 2016 will be subjected to an additional 3% in stamp duty. For example, if the second home you are buying costs between £125,001 and £250,000 you will pay 5% tax instead of 2%.
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