1,235 Huddersfield Properties Sold in Stamp Duty Holiday Bonanza

On the 8^th of July 2020, the Chancellor announced the first £500,000 of any property bought was exempt from Stamp Duty until 31^st March 2021. This also included buy to let landlords (although they would still need to pay the additional 3% stamp duty level for second properties). Talking to many of you Huddersfield homeowners, I know lots of you are bringing forward your home moving plans to take advantage of this tax cut. Also, many Huddersfield portfolio landlords are looking to save paying the tax by bringing their portfolio purchases forward.  Yet how do you ensure you sell and buy your Huddersfield property whilst the tax cut applies (a saving of up to £15,000 of stamp duty on your next Huddersfield home?).

 

The biggest issue whenever you are selling your Huddersfield property is the properties that you are in competition with. Interestingly whilst plenty of Huddersfield homeowners have jumped onto the stamp duty holiday bandwagon since the announcement, even more property has sold since lockdown has ended, meaning there are 2% less properties for sale in Huddersfield than there were during lockdown. The number of properties for sale in Huddersfield can split down into type…

 

·         Detached Huddersfield homes down 4%

·         Semi-detached Huddersfield homes up 13%

·         Terraced / Town houses Huddersfield homes down 14%

·         Apartments in Huddersfield down 2%

 

So, now you know what you are up against, what do you need to know?

 

The most important factor is the time issue. It currently takes on average 17 to 19 weeks between a sale price being agreed and the keys being handed over, meaning you need to have found a buyer before the end of November or early December to enable you to complete the sale by the 31^st March 2021. That means you really need to have placed your property on the market by the end of September and early/mid-October at the very latest to take advantage of the stamp duty holiday. Don’t get me wrong though, you could put your Huddersfield property on the market after that date, yet the price you will be able to achieve for your property could be affected.

 

There are 2,196 properties on the market in Huddersfield,

of which 1,235 have sales agreed on them

 

Talking of price, or more specifically the asking price. There is a window of opportunity for Huddersfield homeowners to take advantage of this stamp duty tax cut, yet don’t let local estate agents curry favour with you by tempting you with a high initial asking price to win the right to put their for sale board outside your Huddersfield home.

A Which report stated in 2017 that many estate agents routinely over inflated the asking prices of the properties they brought to market. One might ask why this is an issue for Huddersfield property sellers, as surely, they can just reduce their asking price at a later date? The excellent report proved that those estate agents who on the face of it appear to be doing you some kindness by endeavouring to get more for your home with a suggested higher asking price, the property often ended up selling for much less than similar properties that were realistically priced properties from day one and also, they ultimately took longer to sell!

This Which report compared the original asking price with final selling prices for 370,000 properties to ascertain how many estate agents had reduced the initial asking price of properties in order to sell them. Which found that 70,300 (19%) of all 370,000 properties sold had to be reduced by at least 5% in order to get the property sold, whilst the other 81% (299,700) had no or very minimal reductions to get them sold.

 

Of the 299,700 sold properties that weren’t reduced or reduced by less than 5%, the average initial asking price was £261,000, yet they eventually sold for an average sale price of £260,000. For those 70,300 homes whose asking prices were reduced by over 5%, whilst the average listing price was £266,000, their eventual sale price was only £241,000, a loss of £20,000 each. Even worse, those properties with the heavy price reductions (5% or more) took an average of nine weeks and one day longer to sell (when compared to the other properties with no or minimal reductions).

 

What that means is by over inflating your initial asking price of your Huddersfield home, it will cost those Huddersfield homeowners an extra nine weeks to find a buyer and they will lose out on the final sale price by some considerable margin (meaning you will also probably lose out on the stamp duty holiday).

Assuming your asking is price is realistic, you aren’t out of the woods yet. Other things that will help you get the best price for your Huddersfield home in the best possible time (and thus save you money with the stamp duty holiday) are…

 

·         Everyone searches on the portals for their next home. Photos are therefore very important (a picture speaks a thousand words). If the weather isn’t good on the day of the photoshoot, ask the agent to revisit when the sun is out (and even tell them to hold off marketing the property until those pictures are perfect) … as you only get one go at being ‘new to the market’, with all the excitement and interest that causes.

 

·         Employ the services of a solicitor at the same time as instructing the estate agent. Bringing together the legal paperwork of the property you are selling. By doing so, you will save weeks between the sale agreed and completion. Also, solicitors will be really busy, juggling many property transactions at the same time in the next 200+ days. Anything you can do to get a head start on others can only help your cause.

 

·         Kerb side appeal. Look at your property from across the road. Does the front door need painting? Could a tonne of gravel spruce up your driveway? Maybe adding some hanging baskets and planted pots will help to make a home stand out for the best reasons?

 

The final piece of advice I can give you is if you are planning to sell your Huddersfield home, make sure your Huddersfield estate agent can show you proof of similar Huddersfield properties and what they actually sold for to back up their suggested asking price. If the asking price isn’t realistic, the chances are you end up losing many thousands of pounds and wasting everyone’s time. If you would like to chat about selling your Huddersfield home, please do not hesitate to pick up the telephone.

Nimbyism in Huddersfield is Dead – Long Live the Planning Permission Rule Changes: How will this affect the 73,557 Huddersfield Property Owners?

 

The 1^st July 1948 heralded a new dawn in how property was built, as the Town & Country Planning Act 1947 came into force, meaning no property could be built without the say so of the local authority. Now, Boris Johnson has announced a substantial change to that, by in effect, ending planning permission.

 

The decision of what gets built (and what doesn’t) will be removed from Kirklees Metropolitan Borough Council and replaced by Westminster governed ‘Zoning Commissions’. The anticipated reform will give presumptive building rights to any piece of land outside areas of outstanding natural beauty, green belt and national parks, although in the press release there was mention of protection for the countryside.

 

Travel to Europe and it’s common to see out of place haphazard development of new households or commercial buildings, surrounded by open countryside ... so, I hope these new regulations protect us against that.

 

The principles of the planning rule changes are a departure away from looking at each planning application as a standalone application to a ‘zone-system’ of planning. Land will be divided into three classes: 1^st for growth, 2^nd for protection and 3^rd for renewal. Anyone applying for planning permission to develop homes, offices and shops on land zoned for growth, will automatically be granted planning permission; whilst land zoned for renewal planning permission will be granted in principle while Government officers perform checks. Local authorities have until 2024 to designate areas for the three classes and once agreed, planning departments will have little or no say over individual applications that fit the rules.

 

Interestingly, these changes come on top of new planning regulations coming into force this September which gives implied rights to demolish any office building and replace with a block of flats, and the right to build extra floors/storeys on your home.

 

The Housing Secretary has specified the motive behind the changes to the planning system is not to make planning permissions easier to get (although 88% of planning applications are approved by local authority’s already). Instead, they have been done to make the planning process quicker, less expensive and less likely to be held up by special ‘interest’ groups.

 

90% of planning permissions in Kirklees Metropolitan Borough Council were approved last year (compared to the national average of 88%)

Noteworthy, the planning rules were changed in 2016 to turn disused shops and office space into residential homes (called ‘permitted development’ rights), yet these new regulations about to be announced by Boris will take that right even further. This is important because in 2019, there were 241,340 new households created in the country, yet 29,260 of those households came from turning disused shops and office space into residential homes (i.e. the planning permission rule changes made in 2016).

My concern is that the new planning rule changes do not make shop or redundant space into the new 21^st Century ghettos. An RICS report in 2018 showed a massive difference between the conversion of office blocks with planning permission and those without (i.e. permitted development). What was interesting is that only 1 in 5 properties met the national space standards, a non-legally binding suggestion on the minimum size of home, minimum dimensions of bedrooms, natural light, storage & floor to ceiling height, whilst 3 in 4 of office block conversions that did obtain planning permission met the standard.

These planning changes cannot be a charter for cowboy builders or developers, otherwise your children or grandchildren could end up renting one of these sub-standard homes, thus stealing human dignity from thousands of youngsters who will end up renting these homes.

 

So, what does this all mean to Huddersfield homeowners and Huddersfield landlords? If you have been reading my articles you will know that one of the most important factors holding back the Huddersfield property market is the lack of new properties being constructed and when they are, the lack of infrastructure surrounding them.

 

Since 1995, only 4,740 properties have been built in HD1 to HD5

 

Yet, these new planning changes will also introduce a new method of taking a lot more money off landowners and builders, as the Government will take a larger share of uplift in land value (i.e. the increase in value from farmland to building land) to finance infrastructure around the development. This would mean new housing developments would come with upgraded roads, GP surgeries, primary schools and shops that these new communities need to be viable. Also, communities will be asked to decide on their own standards on style and design for new developments in their area, allowing residents a greater say on the development in their locality.

 

Like all things, the devil is in the detail. All of us in Huddersfield cannot deny that we need to build more homes to keep up with the ever-growing population and the fact that people are living longer. This new planning system should lead to more housebuilding, which in turn would increase the supply of property for those trying to get on the property ladder. Also, in the proposed legislation is the new ‘First Homes’ scheme, which would allow key workers, first time buyers and people who live or work in the Huddersfield area to purchase their new home at 30% less than its market value and when they come to sell it, that 30% discount would be passed on to the new buyer (if they also met the criteria).

 

With regard to what can be built and where, Huddersfield people will have a say upfront (i.e. between now and 2024 when the zoning rules are drawn up) but once the zoning has been established, then ‘nimbyism’ will become a thing of the past and hopefully we can construct the Huddersfield homes we are proud of for our children and for Huddersfield generations to come. 

 

Please do let me have your thoughts on this matter.

Huddersfield OAP Homeowners to Face £11,293 Coronavirus Tax Bill?

The Government is on track to borrow £400bn because of Coronavirus and that needs to be paid back at some stage. Last year alone, before Coronavirus, the Government brought in £824 billion in taxes whilst they spent £887 billion, meaning they had to borrow £63 billion. In fact, the last time taxes were higher than spending in the UK was 1998, meaning since then the country has been living beyond its means.

 

Interestingly, whilst these are certainly eye watering numbers (£400bn is a lot of money in anyone’s book) most people aren’t too concerned in the short term. Because interest rates are so low, the Government are able to borrow this money at 0.39 percent per annum over a 10-year period on the Gilt Markets. There are even 3-year Government gilts at a negative interest rate. This is because the UK has been considered (and still is considered to be) a monetary sanctuary/safe haven for the last 20 years because of the country’s robust credit worthiness. Cheap money – yet it still needs paying back in the years to come and that can only be funded by taxpayers.

 

Ultimately, the Government will have to try to balance the books and that means increasing taxation. I know many will say there is waste in the NHS and MoD procurement, but that has already been squeezed quite hard during the Credit Crunch crisis and years of austerity. Some have suggested stopping the triple lock on pensions, which costs the Exchequer £6bn a year more than if pensions had risen at pre triple lock rates, so that isn’t going to make much of a dent in the debt. Some have suggested we could enter into a second wave of austerity, like we saw from 2010, yet neither the voters nor the wage frozen public sector would accept that. That leaves tax rises as the only option for leaders who claim to take a responsible long-term view of the economy.

 

The Government could raise tax on spending with VAT increases, but they did that in 2011 when it rose to 20% (from 17.5%). Also, increases in VAT affect the poor more than the rich. Then they could raise it from earnings (Corporation Tax, Income Tax and National Insurance) yet it’s been proved raising these ‘earning taxes’ ends up being counter-productive to the economy, resulting in tax receipts going down (even though the tax rate went up). Both are unsatisfactory, not least because big rises end up being unfair to someone.

 

So, some ‘think tank’ groups have suggested that we look to unearned wealth and the equity people, especially the older generation are sitting on in their homes, to pay for Coronavirus. Whilst I am in no way promoting and advocating that idea, I thought it was a fascinating suggestion and wanted to know what that would mean for Huddersfield homeowners if such a fanciful idea took hold?

 

OAPs in Britain sit on £1.425 trillion in

housing equity in their own homes

 

The average length of time an OAP homeowner has been in their property, according to official figures, is 24.7 years, meaning on average, 75.8% of that equity is profit. So, if say a capital gains tax of 10% was placed on any profit, it would raise £107.84bn over the next 20 to 25 years. So, what would that mean to Huddersfield OAP homeowners?

 

Huddersfield OAP homeowners own £2.772bn

worth of property

 

Taking into account the average length of time those homeowners have been in their Huddersfield home, that is an ‘unearned’ profit of £2.097bn, or £1.110bn after inflation. Some ‘think tanks’ have said that should be taxed as some form of capital gains tax.

 

To give you an idea, if every OAP homeowner in Huddersfield had to pay a 10% capital gains tax when they (or their descendants) sold their Huddersfield home, that would cost them £11,293 each (or a total of £209.7m).

 

So, is this the answer to pay for Coronavirus? There needs to be tax reforms to protect the public finances yet is it fair to tax previous capital gains? Many people say no. Let’s not forget people buy their homes out of taxed income, then pay Stamp Duty, VAT on any improvements and inheritance tax if the property value is more than £675,000, so is it fair the Government want another slice of pie?

 

The older generation who bought these homes saw mortgage rates of 19% in the late 1970’s and 16%+ in the early 1990’s, meaning for every pound borrowed, they ended paying back £3 to £4 when you added up the interest. Also, let’s not forget all the money spent on keeping up the maintenance - money that has already been taxed. The upshot will be this would stop OAP’s selling their homes because it would discourage older people from trading down to a smaller home in retirement, making it even harder for younger families to find a big enough home to live in. Also, many people use the equity in their home to pay for retirement care, so if some of that is going to keep the debts down, that means the Government will have a larger social care bill in future years.

 

One school of thought could be taxing future tax-free gains for ALL homeowners, although given the Tory’s dependence on the more mature middle class (homeowning) voters, this might be a step too far for the Conservatives, so some have said this will be kicked down the road for Labour to sort. Sir Keir Starmer, who appears to be quite a straight-talking and even monetarily responsible Labour leader, is certainly a lot more voter friendly to the British electorate than Corbyn.

 

At the 2024 General Election, he could introduce what appeared to be a smart agenda of tax increases on unearned property capital gains and as long as it was presented in a clearly defined way, maybe turning the tables on the famous Tory General Election poster from 2010, when the Tory’s mocked Gordon Brown for doubling the national debt, implying it was Labour’s fault for the increase in national debt when in fact it was the Credit Crunch that caused it.   

 

Starmer could soberly state Labour were the only party that could be trusted to make hard decisions to avoid burdening future generations with the £400bn ‘Tory’ coronavirus debt

 

One way or another, this £400bn (or £14,440.43 per household) is going to need to be paid back eventually; that means a rise in taxes. Nobody likes paying more tax - yet the truth of the matter is there is a lot of wealth tied up in property, especially with the older generation and so I suppose its introduction is inevitable in the future.

 

Please tell me your thoughts on the matter…

What’s Next for the Huddersfield Property Market?

There is no doubt that Coronavirus will affect the Huddersfield property market, but just how?

The ensuing economic challenges are going to impact the Huddersfield (and UK) property market, yet no one knows the real answer. The newspapers eulogise different opinions, but that's all they are – opinions and everybody's got a different opinion. The truth of the matter is we don't know and won’t know for another few months at least, if not more?

There have been some outstanding Government supportive measures both for tenants, landlords, home buyers and sellers (including a pause on evictions for tenants, and for landlords and homeowners, mortgage payment deferments and stamp duty reductions to make buying a home cheaper), and whilst these are only temporary, they have done their job, meaning there is a good level of activity in the Huddersfield property market.

A lot of that is pent-up demand from a couple of years of uncertainty because of Brexit. Also, we had the General Election in late 2019, so there have been so many reasons for people to sit on their hands. At the beginning of 2020, it was like a water hose ready to burst with the Boris Bounce in January and February. Then, just as things were beginning to get going in the Huddersfield property market, we had everything freeze up for months during lockdown. Since lockdown has been lifted …

the Huddersfield property market is open once again for business

and there is unquestionably some impressive activity both in

the sales and rental market

So, back to the original question and where are we going? I think what we will see is a subtle change to where people want to live because of the pandemic. People working from home has shown that the need to be in the big cities has reduced and as employees have realised, they can work very efficiently from home, plus they are happier and have a better work/life balance. Their employers are also happy as they get more work out of their staff and can reduce their costly office footprint in the cities. The same goes for Huddersfield tenants as they are wanting more from their rental homes. Three trends we have noticed is there is greater demand for properties with gardens, greater demand for Huddersfield landlords who will accept pets (as they now can have them as they work from home) and finally, tenants willingness to pay top dollar for ‘top of the range’ properties, whilst more basic and uncared for properties without all the ‘bells and whistles’ need to go for a discount. There certainly has been a flight to quality.

Yet, what worries me is the fundamental future uncertainty in 2021 and beyond. What will things look like, say in spring 2021, when the Stamp Duty reductions are phased out? Any property sold needs to have completed by the end of March 2021 to take advantage of the tax holiday, meaning you need to have sold your Huddersfield property by November 2020 at the very latest to ensure your property purchase and sale deal goes through in time (as it is taking on average up to 17 weeks between sale agreed and completion). This is where the difference between a great solicitor, brilliant estate agent and awesome mortgage broker compared to average ones will show. Good ones, when all three are working together for you, can get the sale through in 6 to 8 weeks, not the national average of 17 weeks, meaning if you are cutting it fine, you might not be able to take advantage of the tax savings in the spring. Give me a call if you want to know who the best of the best in Huddersfield are to ensure you don’t lose out on those tax savings. 

The value of the average Huddersfield home

currently stands at £165,900

So, what is going to happen to the Huddersfield property market? It really depends on the economy as a whole and of course the property market is a large part of that. I know one thing that buy to let landlords and home buyers don't like is ambiguity and the British housing market has always lived and breathed on emotion and sentiment. People will only buy and sell property (and borrow the money to make those transactions happen) when they feel good. Are all these things like Stamp Duty holidays just putting off the inevitable? Are we heading for the mother of all property crashes?

Well, let me put sentiment and opinion aside for a second and look at the simple facts.

We have an increasing population,

yet we don't build enough houses

Since 1995, we have built on average 150,200 properties per year. The Barker Report said 2004 the country needed 240,000 per year to satisfy annual demand for new homes and whilst the number of new homes built in the UK last year rose 1% to a 13-year high, only 161,000 homes were built. That means over the last 25 years with the difference between actual homes built and the targets set out in the Barker Report, we have an inbuilt shortage of 2,245,000 homes, meaning …

since the Millennium, property values in

Huddersfield have increased by 166.9%

Other factors have contributed to that. The average age of a person leaving their parents’ home in the UK is 24.4 years and that has been dropping for a few years meaning more homes are required. People are also living longer (in 2000 the average person lived until 77.7 years and now it’s 81.1 years – doesn’t sound a lot until one considers for each additional year the average person lives in the UK, we need an additional 356,500 homes). Finally, we have got immigration. In the year ending March 2019, 612,000 people moved to the UK (immigration) and 385,000 people left the UK (emigration) – meaning a net increase of 227,000 people (or a requirement of c.100,000 homes to house them in one year alone). All those factors in themselves mean…

we have more demand for Huddersfield property than we have

supply and that's not going to change any time soon

Property markets are driven (like all markets) by supply and demand so I believe Huddersfield property values can only rise in the long term. The question is whether Huddersfield people will have the sentiment and confidence to borrow money on a mortgage and invest in Huddersfield property, yet at the moment with ultra-low interest rates, borrowing money to buy a home has never been so cheap and if you are in it for the long-term (which you should be with property) then I think it's good news.

One piece of good news is that mortgage lenders are willing to lend up to 90 per cent loan to value mortgages for first time buyers (and in some rare cases 95 per cent), albeit with a lot of strings attached ... yet this is a good sign as the banks and building societies wouldn’t be lending at these levels if they were too scared.

Investing in property, be it for yourself to live in or buy to let is a long-term game. We might see an uplift in prices in the short term because of the demand mentioned above, then again, we might see a dip in 2021 - yet again for the reasons mentioned above - until we start to build new homes to the scale of 300,000+ a year (something that has never been achieved since 1969), the long-term picture appears to be good. Be you a Huddersfield landlord, Huddersfield house seller or Huddersfield buyer, you have to be a lot more strategic and thoughtful about what you are going to do. If you would like to pick my brains, drop me a message on social media or pick up the phone.

So, those are my thoughts, tell me your thoughts for the future of the Huddersfield property market?

Every Huddersfield Homeowner & Landlord to Receive up to £5,000 Grant for Roof Insulation & Double Glazing from September What you need to know

The Chancellor announced on Wednesday 8th July in his mini Budget some interesting news for Huddersfield homeowners and Huddersfield landlords. Rishi Sunak is going to give ‘The Green Homes Grant’ of up to £5,000 to cover two-thirds of the costs of environmentally friendly upgrades to your Huddersfield property, with the homeowner covering the other third. There are also enhanced grants of £10,000 for the poorest households where 100% of the cost will be met by the Government.

This is nothing new mind you. The coalition Government in 2013 announced The Green Deal. That deal was in theory to have been a help for the builders, energy saving and home improvement industry, as the Government hoped many would take up environmentally friendly improvements to save energy (and ultimately greenhouse gases). Yet by the time it was brought to an end two years later only 14,000 households had applied, costing the taxpayer £238m (or £17,000 per household). That doesn’t sound good value to me – yet who am I to comment?

Anyway let’s not be negative, as improving our homes does makes sense – after all, research shows Brits have the draughtiest homes in Europe. A recent survey suggests UK homes “leak” heat up to three times more quickly than more energy-efficient homes on the continent.

Data from 80,000 smart thermostats across the EU were reviewed to measure how quickly a home at 20°C inside cooled once the heating was turned off (when the outside temperature was 0°C). Within 5 hours, the average British home dropped by 3°C, the French came in second at 2.5°C yet the Germans came in at just 1°C, meaning British homes clearly need more heating (i.e. greenhouse gases) to keep them warmer.

The chancellor has allotted £2bn to the scheme, which pays for two thirds of the cost of the upgrade and stated that more than 650,000 homes would be upgraded.  This could save those households a total of £195m a year in heating bills (or the equivalent of £300 a year per household), cutting greenhouse gases and saving jobs in the construction industry. The grants can be applied for from September and is open to Huddersfield homeowners and private sector Huddersfield landlords. Applications must be made before March 2021 and the Treasury have stated about half of the fund would go to households with the lowest incomes (how low is still to be announced), with an enhanced grant of up to £10,000, saving them up to £600 per annum each on their heating bills.

The average Huddersfield home annually produces 4.392 tonnes of CO_{2 ,} compared to the national average of 4.101 tonnes

Due to the particular individual nature of the properties in Huddersfield and their construction type, with suitable improvements in insulation, double glazing and draught proofing, Government statistics state that this could be reduced to 2.541 tonnes for Huddersfield homes if suitable work (as per the Green Homes Grant) was carried out.

Why is this important? Well UK householders spend £34.735bn a year on their electric and gas bills – this is a lot of money. In fact, looking specifically at Huddersfield properties …

Huddersfield householders spend £755.65 per year on

heating their homes (compared to the national average of £669.34 per year)

Yet, if Huddersfield householders carried out the energy improvements that ‘The Green Homes Grant’ suggests their energy bills for heating alone would reduce to £547.58 per year ... quite a saving over a decade and beyond (enough to buy a decent holiday – whatever one of those is!).

So, with Huddersfield homeowners and Huddersfield landlords being able to spend the grant on loft, floor and wall insulation, low carbon gas boilers, heat pumps, double or even triple-glazed windows, energy-efficient doors and low energy lighting … everyone should win – the environment, the economy and household budgets. More details on the scheme should be released by the Government in August.

Huddersfield Home Buyers & Landlords Set to Save £2,227,720 in Stamp Duty Over Next Nine Months

The British are infatuated with owning their own property and politicians know that. Margaret Thatcher used it as a vote winner in 1979 when she allowed council house tenants to buy their own home. Coming to the present day, Boris Johnson’s Conservative government have anxieties that the Brits have not been buying nearly enough homes lately and, as with all countries in the world, the British property market was put ‘on ice’ for several months to help contain the Coronavirus, exacerbating the problem.

The Chancellor, Rishi Sunak, announced plans to boost the property market by momentarily scrapping Stamp Duty Tax (a tax paid by homebuyers) when they buy a property that costs less than £500,000.

Interestingly, Stamp Duty was originally introduced in 1694 as a way to raise funds for The Nine Years' War (1688–1697) against Louis XIV of France and applied to property and some legal documents.

Why is this important? Well the Government recognise that when the property market is working well, the economy also tends to work well, yet one of the barriers to people moving home is Stamp Duty. Even before Coronavirus, Brits were moving 40.21% less than they were at the start of the millennium, and now with this dreadful situation, the natural reaction is for people to stay put in their own homes, meaning another potential nail in the coffin for the economy.

Stamp Duty has raised not an insignificant £166.53bn since 1998, impressive when you consider the NHS costs £129bn per annum. Looking at more recent figures, the Government currently raise £1.045bn per month from Stamp Duty Tax and this statement will remove a good chunk of that from the Chancellors coffers each month, yet the Government knows a healthy property market will help the wider economy.

As Stamp Duty is a transaction tax, it restricts labour market mobility, making people who are thinking of switching jobs think twice before moving. Stamp Duty also holds back elderly homeowners from downsizing to smaller homes, which is an issue for the UK, as we don’t have enough homes to meet supply and also curtails first time buyers as it forces them to use some of the savings on the tax, as opposed to using for a deposit.

Before the changes, the Stamp Duty thresholds were as follows: 

-          Zero percent up to £125,000

-          Two percent of the next £125,000 (the portion from £125,001 to £250,000)

-          Five percent of the next £675,000 (the portion from £250,001 to £925,000)

-          Ten percent of the next £575,000 (the portion from £925,001 to £1.5 million)

-          12% of the remaining amount (the portion above £1.5 million)

and between the 8^th July 2020 and 31^st March 2021

-          Zero percent up to £500,000

-          Five percent of the next £425,000 (the portion from £500,001 to £925,000)

-          Ten percent of the next £575,000 (the portion from £925,001 to £1.5 million)

-          12% of the remaining amount (the portion above £1.5 million)

Landlords and buy to let landlords will also benefit from these reduced rates yet will still have to pay their additional premium for second homes (as they have since April 2016).

To give you an idea how significant this is, if these rules had been in place exactly a year ago for Huddersfield properties purchased under £500,000 (i.e. between the 8^th July 2019 and 31^st March 2020).

Stamp Duty would not have been paid on 1,218

Huddersfield properties, worth in total £263,635,700

Anyone buying any home in Huddersfield over £500,000 are also winners in this, as they will save having to pay the first £15,000 in stamp duty (under the old scheme). This is because during these 9 months, stamp duty is only paid on the difference over £500,000 (so if you buy a property for say £620,000 – one only pays the stamp duty on the difference between £620,000 and £500,000 i.e. £120,000).

I’m all for reducing Stamp Duty, which is imposed progressively at higher rates the higher a property costs (as you can see from the tables above). Yet, short-lived changes to property taxation risk warping the property market and generating a ‘property market hangover’ in Spring 2021. I am part of a group of 2,500 estate and letting agents from the UK, and most of us were running at 150% speed before this announcement, coping with the post Coronavirus explosion in demand.

Now it seems that the ‘feast’ will continue until the end of March 2021 as many more people will move to take advantage of the cut in tax. However, some are suggesting this could lead to ‘famine’ down the line as it will stop people moving into the late spring and summer of 2021.

History tells us different stories on the influence on transaction volumes from changing Stamp Duty rates. In 1991 the Tory’s raised the Stamp Duty threshold at which house buyers started paying and Gordon Brown did so in 2008 when we went into the Credit Crunch. More recently, both George Osborne and Philip Hammond fine-tuned Stamp Duty so that landlords had to pay an additional Stamp Duty Premium after March 2016 whilst first-time buyers pay less Stamp Duty and the purchasers of more expensive homes (over £1.5m) pay more.

The Stamp Duty changes for landlords in 2016 affected the property market only for a short while and by the autumn, transactions levels had returned to normal. However, in 1991, John Major’s Stamp Duty change encouraged home buyers to bring forward home purchases but nevertheless the property market ground to a standstill again once the benefit ended (although the steps up the 1990’s Stamp Duty levels were much harsher as the tax applied to the whole purchase price, not the margin steps as it had in the 1990’s).

So how much money will Huddersfield people save when buying a home under £500k?

The average Stamp Duty paid by those Huddersfield home buyers in the 9 months between the 8^th July 2019 and 31^st March 2020

was £1,829

Being objective, I can see why the Chancellor could see this as a suitable way to motivate spending because when people move home, they are more inclined to spend comprehensively on property renovations and the services of solicitors, home removal people, tradesmen and estate agents. So, drastically reducing Stamp Duty will undoubtedly help the UK economy, or at least contain some of the damage from the Coronavirus.  

Also, the experience of being in lockdown will have confirmed to many Huddersfield people that they need a bigger home or one with a bigger garden. I also suspect other people may be able to work from home on a more long-lasting basis, meaning there could be a shift from the larger cities to outlying towns and even a move to the countryside.

So, these are my thoughts, what are yours?

Huddersfield Property Market – the Last 10 Years

One of my Huddersfield landlords contacted me last week from Brighouse, after he had spoken to a landlord friend of his from Ferndale. He told me they were deliberating the Huddersfield property market and neither of them could make their mind up if it was time to either sell or buy property following Covid-19. His friend said he would wait to see what would happen to property prices following Covid-19, yet my landlord wanted to pick my brain in order to help him decide what to do.

I said the press are aware bad news sells newspapers and the doom mongers are plying their trade on uncertainty in the world economic situation. Roll the clock back to the Credit Crunch of 2008/9, and there were quite a few landlords in Huddersfield who had overexposed themselves with high percentage loan to value buy to let mortgages, backing the hope they would make their money on the capital growth, yet fell foul of a drop in rents and thus got bankrupted (but who could blame them when the property market was rising at 15% to 20% a year in the early 2000’s and banks like Northern Rock were giving mortgages out to anyone with a pulse and note from their Mum).

Thankfully the Bank of England changed the rules on all mortgages in 2014 banning self-certification mortgages, tightening the rules around interest-only mortgages and the requirement around affordability to be checked, plus a tough stress test if interest rates rose. It’s obvious we are going to enter into a recession because of Covid-19, yet this time the Huddersfield property market is better placed to weather the storm.

However, gone are the days when you could buy any old house in Huddersfield and it would make money. Yes, in the past, anything in Huddersfield that had four walls and a roof would make you money because since World War 2, property prices doubled every seven years … it was like having a free cash machine.

If a landlord bought a Huddersfield terraced / town house in the summer of 2000, he or she would have seen a profit of £67,600 to its current value of £110,100, a rise of 158.9%

Nonetheless, if that landlord had bought the same property in 2010, the Huddersfield landlord would have only made £10,400 profit (a 10.4% increase). Yet since 2010, the country has experienced 31.5% inflation, meaning our Huddersfield landlord has seen the ‘real’ value of their Huddersfield property decrease by 21.1% (i.e. 10.4% less 31.5% inflation).

And this is my point. Nobody has been complaining about the property market in the last ten years, yet landlords are still worse off in real terms. If we do see a slight dip in property prices because of Covid-19 (looking at the market at the moment I haven’t seen any indication of its slowing down from its post lockdown takeoff), but if we do, Huddersfield landlords need to realise property values aren’t the only indicator of whether the property market is good or not.

The reality is, since around the early 2000’s we haven’t seen anything like the capital growth in property we have seen in the past and it’s not predicted to grow at the rates it has previously done either. So, I believe it is high time for any Huddersfield landlord, pondering investing in Huddersfield property to stop believing the hype and do some serious research using independent investment expertise. You can still make money by buying the right Huddersfield property at the right price and finding the right tenant.

Think about it, properties in real terms are 21.1% lower than a decade ago, so investing in Huddersfield property is not only about capital growth, but also about the yield (the return from the rent). It’s also about having a balanced property portfolio that will match what you want from your investment – and what is a ‘balanced property portfolio’? Well we discuss such matters on the Huddersfield Property Blog ... if you haven’t seen the articles, then it might be worth a few minutes of your time?