Well, no one expected properties to be given away - or even anything too spectacular from the 2009 Budget in view of the fact that the government’s borrowing is so high. However, some of the changes that are being made will help the property market - and the construction industry - for the rest of the year. But how will it affect you?
By Kate Faulkner
The Stamp Duty Land Tax (SDLT) of residential property sales up to £175,000 is to be extended to 31 December 2009. The SDLT threshold will revert to £125,000 (£150,000 in disadvantaged areas) from 1st January 2010.
This is good news for potential buyers as it was due to end in September this year. Unfortunately, as mortgage lending has been so restrictive, few people have been able to benefit – especially first-time buyers. However this extension gives a bit more time for lending restrictions to ease and hopefully more people will be able to take advantage.
For those that are calling for ‘scrapping’ stamp duty, it’s very unlikely to happen and to be fair, around 60% of people buying now are paying zero stamp duty, and a further 20% just 1%. However, first-time buyers could do with more help - making them exempt for properties under £250,000 would also help those in London/the Home Counties, who can’t currently benefit from the zero stamp duty increase due to the average house price being higher than £175,000.
The standard rate of VAT will revert from 15% to 17.5% on 1st January 2010.
Although you may not think this affects you buying or selling a home, it does. For buyers who are likely to spend around £8,000 in the first two years of buying, paying less VAT could save around £200. You will also save money on your conveyancing bill and removal costs.
However, if you are first-time buyer, your big win is to probably look to buy towards the end of the year. Many buyers disappear in December when sellers are at their most desperate, so you typically get better deals. Once you have secured your property, you can then buy everything in the January sales!
For sellers, your estate agents', conveyancing and removal fees will be less too, so if you sell a property for £175,000, you’ll save from £150-200 on your fees.
For 2010-11 the limit is increased to £10,200 (up to £5,100 can be saved in cash).
This is good news for anyone saving for a deposit and hoping to buy in the next year or two, but unfortunately it’s only applicable for the under 50s from next year. It would have been good to have introduced this increased limit now for everyone, especially so for first-time buyers as this could help them save for their deposit for the future.
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