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Additional Savings Up to £15,000 for UK Property Investors

New UK Stamp Duty Rates Offer Up to GBP15K Savings on  UK Property Purchases for Investors.

Big Rush for UK Property Expected  As Investors Gun for Additional Savings.

Property investors can expect further discounts on new property purchases in England and Northern Ireland effective immediately.

Yesterday, British Chancellor Rishi Sunak announced a temporary stamp duty holiday to further boost the UK property market until 31 March 2021.

This means that the stamp duty threshold has been raised from £125,000 to £500,000, resulting in savings of up to £15,000 on the tax bill for property investors. This is an incredible deal for foreign property investors, especially those from Asia, as it could mean discounts of up to $26,000 if you’re from Singapore, up to RM80,000 if you’re from Malaysia or up to HKD140,000 if you’re from Hong Kong (based on current exchange rates)!

Currently, foreign investors benefit from the savings derived from (i) affordable currency exchange rates (ii) lower interest rates and (iii) 45% crisis advantage.

How Does The Stamp Duty Holiday Affect UK Property Investors?

The new stamp duty rates will mean savings of up to £15,000 for investors.
The new stamp duty rates will mean savings of up to £15,000 for investors.

Based on the new rates, stamp duty is chargeable only from £500,000. Investors will now only be charged a flat rate of 3% for a property priced up to £500,000 — so, for example: for a property worth £300,000, the stamp duty paid will now be £9,000 instead of £14,000!

Meanwhile, first time property buyers (those who live in the property) in the UK pay no stamp duties whatsoever until they hit the £500,000 threshold. 

There will be a rush for UK properties as investors seek to take advantage of the stamp duty holiday by 31 March 2021 and avoid the additional 2% stamp duty surcharge for non-resident buyers that is set for April 2021. 

READ  UK Property Outlook 2017

This window of opportunity won’t last forever. As soon as the market recovers and the stamp duty discount ends, property prices will increase! Find out also how you can take advantage of the 45% crisis advantage here: https://bit.ly/45Advantage

 

The Resilience of the UK Property Market

WHY ARE INVESTORS STILL INVESTING IN UK PROPERTY? 

The coronavirus has undoubtedly affected lives and the economy, globally. Investments, particularly those that respond to volatility like the stock market, took a real beating. The UK is no exception. 

Nonetheless, the UK continues to remain a safe haven for many investors and the property market is still highly sought after. Hence, while property prices have been slightly impacted due to restriction in movement as a result of the Covid-19 lockdown (agents unable to conduct viewings, thus affecting housing transactions), there is confidence in the resilience of the market.

Here’s why:

1) Massive housing undersupply 

As the housing shortage grows each year, it is anyone’s guess now whether the UK government can ensure supply catches up with demand. Image credit: Tackling the Undersupply of Housing in England https://commonslibrary.parliament.uk/
As the housing shortage grows each year, it is anyone’s guess now whether the UK government can ensure supply catches up with demand. Image credit: Tackling the Undersupply of Housing in England https://commonslibrary.parliament.uk/

Financial downturns have done little to dampen the spectacular growth of the UK housing market since 1952. This is because the UK has been facing a critical shortage in housing — recent statistics show that the shortage has snowballed to more than 4 million, resulting in the need for 240,000 to 340,000 homes to be built each year until 2031 to make up for the shortage. The slowdown in construction activity prior to the 2019 general election due to Brexit and, more recently, due to the Covid-19 lockdown has further constricted the housing supply pipeline. Simple economics tells us that when demand is higher than supply, prices go up.

2) Strong Economy 

Most economic forecasters have predicted a sharp and short economic contraction in 2020 as a result of Covid-19 followed by a rebound by 2021. Oxford Economics predicts the UK economy will shrink by 8.3% in 2020 but expects output to rebound by 7.8% next year, potentially returning to its pre-crisis position in 2021. Fact: the UK snubbed its nose at the gloomiest of economic forecasts made ahead of the Brexit vote with joblessness as its lowest level since the mid-1970s while wage growth accelerated to the highest levels in a decade. 

3) Strong Rental Property Due to Tight Vacancy Rates

England_Vacancy_Rates_ONS
The availability of housing for rent/ sale is extremely tight in the UK, particularly in cities like Manchester, London and Birmingham.

The housing undersupply has caused extremely tight vacancy rates in the UK. As a rule of thumb, a vacancy rate of 5% and below is considered tight. Latest data released by the UK government for total and vacant housing shows that the UK’s vacancy rates are very low, with cities such as London, Manchester and Birmingham at extremely tight rates of 2.5% and below! What this means in actual numbers in London, for example, is that only 1 out of 50 houses are available for rent/sale!

By Vivienne Pal

This window of opportunity won’t last forever. Take advantage of it now. Find out how and learn more about our masterclasses by contacting us here: https://csiprop.com/contact/

Additional Reading:

https://www.theguardian.com/business/2020/jan/30/brexit-uk-economy-close-to-turning-point-on-eve-of-leaving-eu

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https://www.savills.co.uk/research_articles/229130/298265-0

https://www.savills.com/research_articles/255800/296080-0/prime-price-movements

https://www.gov.uk/guidance/stamp-duty-land-tax-temporary-reduced-rates

https://www.telegraph.co.uk/property/buy-to-let/does-stamp-duty-work-second-homes-buy-to-let-purchases/

https://www.bbc.com/news/business-53319433

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