The cut in stamp duty last week has resulted in a welcome boost to the housing market with record numbers of prospective buyers now house-hunting.
Property portal Rightmove experienced a 22pc surge in visitors to its site within minutes of the news breaking that stamp duty was to be cut for thousands of properties across the UK. In fact, July 8, the day of the Chancellor’s mini-budget, was the company’s busiest day ever.
Would-be buyers are rushing to gain a foothold on or move up the housing ladder as stamp duty is now payable only on homes over £500,000. Additionally, the tax cut also covers second homes and BTL properties, although the 3pc surcharge still applies.
The effect of the property tax cut has broken records, according to the portal’s data. Last Wednesday, 8.5 million people visited the website, compared to the previous record of 7.7 million. Not only that, but estate agents also reported a colossal increase in enquiries from prospective buyers.
The data also showed that a surge in interest in new-build homes, too, hit a record high. Rightmove recorded a 35pc increase in enquiries from the buying public over the previous record, and an annual rise of 80pc.
What is driving the interest in new-build homes?
Under the new, temporary cut announced by the Chancellor, stamp duty is not payable on properties below £500,000. However, as was the position before the change, homes exceeding the lowest rate are charged at incrementally higher rates, depending on the value.
For instance, on a property worth £600,000, the first £500,000 is now tax-free, while the remaining £100,000 will be taxed at 5pc. This means that purchasers, especially of more expensive homes, will make greater savings and could be in the fortunate position of being able to consider homes with a larger price tag.
And it is this that could explain the surge in demand for new-build homes which tend to sell at a premium compared to second-hand homes.
The benefits of buying new
First of all, there are no chains involved in buying a new-build home, which means there are no issues that could slow down the purchase. Another bonus is that developers may offer discounts as an incentive to potential purchasers to buy off-plan while the design is at an early stage.
For peace of mind, a new-build home comes with an NHBC (or similar) 10-year warranty, which consists of a two-year builder’s warranty followed by an eight-year insurance agreement.
Naturally, all fixtures, fittings and decor will be brand new, up-to-date and unused, and most new appliances also come with warranties. Developers, too, often install the latest smart technology as a selling point.
A new-build is significantly cheaper to run than most existing properties, which goes some way over time to offset the premium paid at the time of purchase.
A new-build is also far more environmentally friendly, built to the latest standards with more efficient insulation, heating systems and appliances. More than 80pc of new-builds have an A or B energy performance rating (EPF) according to the Home Builders Federation (HBF), whereas only 2.2pc of older homes have the same rating.
If you purchase off-plan before or during the construction phase, you may be offered the opportunity to choose the decor, layouts and appliances yourself.
The Government’s Help to Buy scheme, which has helped hundreds of thousands of first-time buyers onto the housing ladder, is available only on new-builds.
A new-build home is much more attractive to tenants, compared to an older, dated rental property where issues such as damp, condensation and unreliable old boilers and heating systems can adversely affect the quality of life.
Last but not least, much lower bills are a welcome bonus for tenants.