As the new year begins it is natural to look ahead and try to anticipate what 2021 might look like for the property market for those who are already involved or who are thinking about transacting. Anyone doing the same in January 2020 would, of course, never have anticipated what the year ahead would throw our way, but on reflection, with some obvious ups and downs, 2020 was far from a bad year by most accounts.
2021 has started with the same challenges that Covid and lockdowns presented in the previous year but with more hardened experience to draw on and with hope. Putting the ups and downs that are still likely to accompany general life in the next few months aside, there is one date that most people are aware of and which is now approaching quite quickly on the horizon – 31 March 2021. This date will bring some more certain changes to the buying process and possibly the property market. The first is the ending of stamp duty holiday which was brought in last Spring and enables a saving for any residential property purchase of up to £15,000, with £500,000 of the purchase price being tax free. This has been mentioned by almost every buyer that I have acted for recently (and in the Residential Real Estate team on the whole) in the first conversation with them and as the date fast approaches it is becoming a more concentrated concern. We are have now entered into a critical period where completion before that date is required in order to make the saving. There is still plenty of time to transact in that time (provided the buyer and seller and both sets of solicitors are proactive), even for conveyancing transactions yet to start and it would be no surprise to solicitors in my team if we still had sellers and buyers approaching us in mid-March asking us to try and get the deal through before that deadline.
Another stamp duty change is also coming on the same date and it is one which seems to have flown under the radar much more – that is the 2% stamp duty surcharge to be payable by overseas buyers completing after 31 March 2021. This surcharge will apply to any buyer who is not resident in the UK – or by definition present in the UK for less than 183 days of the year. This 2% on the full purchase price would be in addition to the existing 3% surcharge payable by anyone buying a second property (and not replacing their main residence) meaning that overseas buyers who already own a property will be looking at a 5% surcharge on top of the standard SDLT rates. The impact on the property market will be significant as have all stamp duty changes before this one.
As mentioned, almost all buyers ask about or mention the stamp duty holiday and the deadline for that but across the team we have heard very little mention of the surcharge for overseas buyers and the desire to beat that impending change. It seems unlikely that the stamp duty holiday will be extended or that this surcharge implementation will be reversed and/or deferred; it is therefore key as the year gets going that these upcoming changes are highlighted to all potential buyers and sellers and that timeframe expectations are suitably managed and of course that we do all that we can to help our clients conclude matters before 31 March 2021 if required and where possible. I anticipate a busy March 2021 for the team!