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How to Make the Most of the Stamp Duty Holiday Extension

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This year’s Spring Budget brought some good news for the property market, in the form of a new government-backed mortgage scheme and a tapered stamp duty extension. 

While many are confident these changes will keep the market firing, some people are unsure about the best course of action. 

Everyone’s situation is different. But, to offer some help, let’s take a look at some frequently asked questions and share some advice. 

When does the stamp duty holiday now end?

The stamp duty holiday ended on 30th June for properties priced up to £500,000. It will now continue until 30th September, but has reduced to properties up to £250,000. 

After that, the holiday / tax cut will end. Normal rules regarding stamp duty will apply; nothing paid on the first £125,000 and first-time buyers are exempt. 

As a buyer, how can I make the most of the stamp duty extension?

Rightmove reported a surge in online property searches following the Budget announcement. There are now high levels of competition from interested buyers, which can make it harder to stand out from the crowd. 

Getting organised is a must; be proactive in every decision you make and diligent every step of the way. This applies to house hunting and beyond. 

Things are busy, so now more than ever, preparing to buy a house is key.

How to get prepared

Sellers like prepared buyers; those who are willing, able to move quickly, organised and communicative. Here are some top tips for how to get organised:

  1. Have a clearly defined search brief and budget
  2. Get a mortgage agreement in principle 
  3. Consider using a buying agent (can make you look more committed)
  4. Get all the documents you need to buy a house together and do as much paperwork as possible upfront
  5. Keep communication open

Top tip: speak to a mortgage adviser early on. You’ll not only be able to arrange property viewings knowing what you can afford, but you can secure an agreement in principle, proving to sellers you’re serious about buying. Get a mortgage quote from a member of an experienced panel below. They are waiting to help you.

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Don’t overpay in the rush

It’s important to emphasise that even if you think you’ve found your dream home, don’t be pressured into paying more for it than it’s worth. 

UK house prices increased by 8.5% in 2020, and while they briefly slowed down early this year, they’re set to rise as people take advantage of the stamp duty tax break. 

Estate agents work for the seller, not you, so don’t fall for any tactics that try and drive the sale price up even further. Ensure you know how much a home is really worth and don’t feel too pressured during house negotiations – stand your ground.

As a seller, how can I make the most of the stamp duty holiday? 

Don’t linger about, be vigilant from start to finish.

Work closely with your estate agent, they’ll have their ear to the ground and be able to tap into local knowledge that you can use to your advantage. 

You should also enlist the help of a good solicitor to take care of all the legal matters; get in there early to ensure you’re prepared. Need help finding an expert? Get a conveyancing quote below, we can connect you with our trusted panel. 

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Is the new mortgage scheme right for me?

The government has announced a new scheme to help home buyers with small deposits get on the ladder. In 2020, lenders pulled their ‘riskier’ loans, namely 95% LTV mortgages, which hit first-time buyers the hardest. 

This new scheme will require buyers to put down only a 5% deposit. The main benefit here is that it will help 

What is a 95% LTV mortgage?

A property purchase is usually paid for through a combination of the deposit and the mortgage. A 95% mortgage means the buyer need only save 5% of the purchase price, and use a mortgage for the rest. 

Who can qualify?

It’s not for first-time buyers alone, or new builds, and it applies to properties up to £600,000. 

Are there any issues?

The scheme doesn’t necessarily make properties more affordable, rather, it allows people to borrow more. Second, low-deposit mortgage interest rates remain high, meaning you could end up paying more over the term of the mortgage. 

Of course, the details (e.g. loan term) will depend on what is set by your mortgage lender.

This isn’t to say the scheme isn’t worth doing, it’s just important to consider it fully, alongside your mortgage adviser. They can look at all options and apply them to your situation, providing the best advice that suits you. 

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What are the alternatives?

When it comes to securing an attractive mortgage deal, with manageable monthly payments, the advice remains that you should save as high a deposit as possible. While this might sound difficult on the surface, small changes make a big difference:

  • Consider renting in the suburbs to save money
  • Cut back on unnecessary luxuries (e.g. expensive coffees) 
  • Make sensible swaps (e.g. buying own-brand items) 
  • Downsize your current home
  • Move back in with family

In general, mortgage rates are lower than usual at the moment – however there’s no telling how long this will last. While the scheme will make home ownership accessible to some, it’s important you carefully consider if it’s right for you – as it’s not your only option. 

Is now a good time for me to buy?

The answer to this depends entirely on your individual circumstances. It’s important not to get caught up in the hype and think carefully about whether now is the right time to buy. 

To work this out, ask yourself:

  • Can you afford a mortgage?
  • What are you looking for in a new home? 
  • Is this somewhere you want to live for the long-term?
    • If it’s for the short term, it might be worth waiting
  • Could you add value to your current property instead?
  • What are your motivations for buying? 
  • Can you afford to own a property?
    • Consider expenses such as maintenance, mortgage payments, monthly bills etc. 

If you can afford it, have found a good property and feel the time is right – it might be sensible to move. If not, it may be better to wait it out. Speak to an adviser to assess your personal circumstances closer. 

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How can I stand out as a first-time buyer in this competitive market?

While the stamp duty holiday has no doubt injected some life into the property market, first-time buyers were hit hard by the pandemic. Just one reason for this is that they lost their advantage when it comes to paying no stamp duty. Property prices also went up as a result.

So, get prepared, keep communication open and leverage that chain-free status where you can. 

Be vigilant 

By being well prepared in terms of finances and solicitors, you can give yourself an advantage. So, get a mortgage in principle, find a good solicitor and stay communicative at all times. 

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Leverage chain-free status

However, they still have a chain-free status that sets them apart from the majority of the market. Property chains are notoriously difficult to manage and often cause sales to fall apart. Sellers who are keen to secure a sale promptly, would often rather sell to a first-time buyer for this reason. 

Build relationships with estate agents

Rely on technology alone; stand out by building rapport with estate agents. Remember that they’re the gateway to information you need on the best properties. Have a clearly defined search brief and be very nice to agents. Having as many personal relationships as possible with them can help you get ahead. 

Is there an alternative way to sell?

Don’t make the mistake of thinking that in a saturated market, your house sale is guaranteed to go through. Many sales don’t reach completion, for a variety of reasons, such as delays in the property chain or a mortgage application.

An online property auction can offer a cheap, faster, more secure alternative to the traditional method of selling. It’s becoming increasingly popular with sellers for good reason. Want to find out more?

Property Auctions – Get Started

Last Updated: May 26th, 2022