SELLERS are dropping prices as the stamp duty holiday deadline nears.
Asking prices fell for the second month in a row, new data shows.
Asking prices have fallen in all area ahead of the stamp duty tax break ending
Asking prices are £2,080 cheaper than last month according to the property website Rightmove.
In December the average asking price was £319,945, down 0.6% on November.
The average asking price was also down 0.5% in November compared to October.
The stamp duty holiday means that buyers won’t have to pay tax on the first £500,000 of their property purchase.
To qualify, buyers must have completed before the end of March next year, not just be in the process of buying a place.
Experts have warned that buyers need to get their skates on to take advantage of the stamp duty saving which could be worth up to £15,000.
Asking prices dropped the most in Scotland, Wales and Greater London.
In Scotland the average asking prices is £162,116, down 2.1% on last month and in Wales it’s £210,943, a drop of 1.9%.
London asking prices were down 1.5% with the average now £620,986.
Houses at the higher end saw the biggest price drop, down 1.4%.
For first-time buyers they fell 0.1% and for those levelling up from a first home, asking prices dropped 0.4%.
What is stamp duty?
STAMP duty land tax (SDLT) is a lump sum payment anyone buying a property or piece of land over a certain price has to pay.
Up until July 8, most house-buyers in England and Northern Ireland had to pay stamp duty on properties over £125,000.
This was temporarily increased to £500,000 until March 31, 2021 in the government’s mini-Budget in July 2020.
The rate a buyer has to fork out varies depending on the price and type of property.
Rates are different depending on whether it is residential, a second home or buy-to-let, or whether you’re a first-time buyer.
The usual system in England for residential properties means:
- First-time buyers pay nothing on properties below £300,000 (and relief available on properties of up to £500,000)
- You pay nothing if the property costs below £125,000
- You pay 2% if it is worth between £125,001 and £250,000
- You pay 5% if between £250,001 and up to £925,000
- You pay 10% if it is between £925,001 and £1.5million
- You pay 12% on anything over £1.5million
For second homes or buy to let properties:
- 3% on purchases up to 125,000
- 5% on purchases between £125,001 and £250,000
- 8% on purchases above £250,001 and £925,000
- 13% on purchases above £925,001 and £1.5 million
- 15% on purchases above £1.5 million
But asking prices remain higher compared to the same time last year across regions and buyer type, up 6.6% overall compared to December 2019.
Rightmove predicts prices will climb next year and grow by 4%.
Tim Bannister, the website’s director of property data, said: “Our 2021 forecast of a 4% price rise is more conservative than the unsustainable 6.6% national average seen this year.
“There’s likely to be a lull in quarter two unless the stamp duty holiday is extended, but for many buyers its removal will not be make or break, though may lead them to reduce their offers to a degree to compensate for the higher tax, and indeed many sellers may be prepared to help to mitigate their buyer’s financial loss.”
He also said that there is likely to be greater availability of low-deposit mortgages at competitive rates next year.
Many mortgage companies pulled mortgages which need a smaller deposit when coronavirus hit.
More of these deals have since returned but can come with higher interest rates and with other catches that make them hard to get for first-time buyers.
First-time buyers can get on the property ladder with just a 5% deposit when they use the Help to Buy equity loan – the new government-backed loan scheme opens for applicants on December 16, and will run until 2023.
Brits have rushed to take advantage of stamp duty holiday and more homes have been put on the market.
Halifax has warned the market will slow when Covid support stops.