Rishi Sunak’s Stamp duty holiday has buyers excited and many industry professionals wary of what this means for 2021. This holiday effectively means that zero stamp duty tax has to be paid on purchases of £500,000 and under in the hope that this will jumpstart the market.
What does the change implicate?
First-time buyers will be completely exempt from the tax. Next time buyers and property investors still benefit from the holiday but still have to pay the 3% stamp duty surcharge.
In effect, this means that buyers in this category could be saving as much as £15,000. This is aimed at helping buyers that had to rethink whether or not to purchase due to the pandemic.
Below we’ve calculated a compiled a few examples to visualize the impact of the changes caused by the stamp duty holiday.
Research conducted at Hamptons states that the average stamp duty tax will fall by £7,240 in London, where 1 out of 5 landlords spends more than £500,000 on a property.
Existing demand has been further fueled by this holiday. With individuals eager to get in while supplies last, it’s expected that there will be a bit of frenzy buying in the next couple of weeks.
With higher cash in their hands, buyers can now obtain mortgages at a lower LTV rate. Bringing back buyers who may have postponed their purchases during the lockdown, as well as sellers who are looking to sell to a larger cash audience.
At XChange, we’ve seen this surge firsthand, as we’ve witnessed a 48% increase in purchase inquiries since last week as the interest rises day by day.
Who is buying?
The spectrum of real estate buyers is large with many different types of buyers.
First time buyers:
The introduction of the stamp duty holiday brought in renewed interest from all walks of life, the first of which being first time home buyers. New buyers are looking to seize this opportunity to purchase a home and looking beyond their initial budget.
This broadens the scope of attractive properties for such buyers, which is great news for agencies looking to increase their bottom line.
Buy to let investors:
Other prospective buyers could take grasp of this opportunity, notably Buy-To-Let investors. Steve Olejnik, managing director of Mortgages for Business called this initiative “great news” for landlord investors.
Next time buyers:
Next-time buyers are now keener to look for properties as they are treated the same as First-time buyers in terms of the exemptions from the stamp duty tax, aside from the 3% surcharge.
Overall, this means that interest and demand could be taking a ramp up as prospective buyers from multiple fronts are looking to seize this time-limited opportunity.
The issue up for debate is whether or not Sunak’s plan will continue to stimulate demand in the housing market after the March 2021 deadline. Helen Miller, of the Institute for Fiscal Studies, was quoted saying that if the economy didn’t recover by then [the initiative] “could lead to a depression of housing sales while the economy is still weak.”
So the question here is, how can you profit from the renewed interest in this time-limited period? And what can be done after then?
How to better utilise the increased demand to maximise profits?
Look into your database and reach out to buyers that were looking post-pandemic
This stamp duty holiday is ideal for prospective buyers who were looking to buy, but were reluctant due to uncertainty, as it gives these individuals the extra push they need to go through with their purchase.
Don’t be limited by your branch location
When demand comes at a larger rate than previously expected, the most efficient thing to do in order to materialise all the leads, is to look beyond your horizon of operation. For example, don’t turn away leads that are looking for properties in SW8 just because you don’t have them. Look into sourcing more properties in those areas. Property trading is a great way to close a deal without having to open a branch in another area.
Get properties on demand for your applicants
Stock and more stock. That is the name of the game. Find the stock your lead is looking for. If they’re coming to you, you’re already ahead of your competitors. Don’t waste it.
Easier said than done, and though this process is labour intensive, there is help available.
XChange exists as a platform to help generate stock for you so that you can close more deals. Our wide range of properties allows you to find relevant properties for your applicant with a click of a button. In a time where contacting landlords one by one is simply not efficient, using a revenue generating platform like XChange will be what gives you the competitive edge in the market. XChange gives you the power to access properties on demand in areas all across London. Not only can you find matches for your applicants within 48 hours but you can also request properties you want to see. To learn more, you can register here.
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