Latest news with #stampDuty
Telegraph
07-07-2025
- Business
- Telegraph
Reeves's stamp duty raid kills the fixer-upper
Rachel Reeves's stamp duty raid has wiped profits from flipping properties, causing the share of homes bought and sold in a year to fall to a decade-low. The Chancellor neglected to extend a stamp duty discount introduced by Liz Truss during her premiership, adding thousands to the cost of moving home. The added tax bill has also caused the proportion of homes bought and sold within a year to drop 1.3 percentage points to 2.3pc since 2024, the lowest it has been since 2013, according to analysis by Hamptons. The estate agent said the cost of stamp duty now eats into 30pc of the profit from buying a home, renovating it and then selling it. Only two thirds of flipped homes sold today will turn a profit, the company added. Stamp duty costs have risen drastically since the end of the pandemic. The Conservatives introduced a stamp duty holiday between July 2020 and June 2021 to stimulate the market during lockdown. During that time, no stamp duty was owed on the first £500,000 of a property's value. As part of the now-infamous 2022 mini-Budget, former chancellor Kwasi Kwarteng raised the stamp duty exemption from £125,000 to £250,000. In April this year, that discount expired, and the thresholds for stamp duty land tax reverted to £125,000. In her maiden Budget, Ms Reeves raised the stamp duty surcharge for second home purchases from 3pc to 5pc, in an attempt to discourage second home ownership and give first-time buyers the edge over landlords. As a result, the number of homes bought, renovated and sold for a profit dropped to 7,301 in the three months to March. The figure was 27pc below the 10-year average for that period, according to Hamptons' analysis of Land Registry data. Aneisha Beveridge, of the estate agent, said the added tax bill, coupled with rising material and labour costs, had 'multiplied the costs for those people who are refurbishing homes to a level that's increasingly unviable'. In the past 10 years, the average stamp duty bill for a flipped property has more than tripled from £1,900 to £6,375, shaving off a fifth of the average profit. Ms Beveridge said: 'Bigger stamp duty bills are wiping out a lot of profit from flipping. In some cases, these bills are now higher than the cost of renovating the property. 'This, together with rising material and labour costs and, in some places, falling house prices, makes flipping homes an increasingly tricky business. 'The second home stamp duty surcharge was introduced to tilt the market towards first-time buyers at the expense of landlords, something that it has successfully done. 'These are often empty homes which need a lot of love and are typically projects that most first-time buyers and movers have shied away from.' Hamptons found the average profit earned on a flipped property in England and Wales was £22,000 in the first quarter of this year. This is £6,000 more than profits earned on properties last year. However, slower house price growth and the shift towards flipping cheaper homes have meant that gross profits have almost halved since they last peaked at £38,000 in 2022, and remain lower than they were a decade ago. Flipping properties increasingly only stacks up in the Midlands and North of England, where property prices and stamp duty costs are lower, Hamptons said. In the three months to March, 61pc of flipped homes were in the Midlands, the North and Wales – up 50pc from a decade ago. Ms Beveridge said: 'It's also where more house price growth has been concentrated over the past few years. While the returns aren't as high as with homes in the South in cash terms, higher yields and lower tax bills continue to make the North the homeland of flipping.'
Times
30-06-2025
- Business
- Times
Mortgage approvals rise for the first time in four months
Mortgage approvals rose for the first time in four months in May as buyers returned to the market after recent stamp duty changes and benefited from gradually falling interest rates. Official figures from the Bank of England showed that new mortgages rose by 2,400 to 63,000 in May, up from 60,600 recorded in April and beating expectations of about 59,000. It is the first time since January that overall approvals have risen on the previous month, after the sector was disrupted by changes to the stamp duty threshold which came into force in April. The total volume of mortgage lending also rose sharply by £2.8 billion between April and May, when credit contracted by £800 million in anticipation of the higher stamp duty. Remortgage approvals also posted the highest figures since February 2024 at 41,500. The effective interest rate paid on the average new mortgage has been falling over the past year, and declined again in May from an average of 4.49 per cent to 4.47 per cent month-on-month. Market lending rates for two and five-year home loans have also slumped to lows last recorded in 2022. The Bank's monetary policy committee cut interest rates from 4.5 per cent to 4.25 per cent on May 8 and is expected to do so again in August, according to financial market projections. Investors are betting on the base rate ending the year at around 3.75 per cent — the lowest since February 2023. 'Now that volatility has started to ease the fundamental drivers of mortgage demand should reassert themselves,' Matt Swannell, chief economic adviser to the EY Item Club, said. 'Mortgage rates are now much lower than they have been for most of the past three years, while nominal earnings growth has been strong. Together, these forces mean affordability is much less stretched than it has been in the recent past.' May's figures are close to the average of 66,000 monthly mortgage approvals recorded before the pandemic in 2019, when average mortgage rates were far cheaper at about 2 per cent. Approvals are also running 2.5 per cent higher than in May 2024. • UK house prices rise after stamp duty 'blip' Anthony Codling at RBC Capital Markets said the contraction in new mortgages in April was proving to be a 'blip not a trend'. 'Housing market activity is broadly in line with the five-year average, comforting news for homebuyers and sellers. However, the government will need to see a more active housing market if it is to get close to its five-year target of 1.5 million new homes,' he said. The resilient housing market is unlikely to translate into strong economic growth in the second quarter, with economists expecting growth to flatline after a posting a 0.7 per cent expansion in the first three months of the year.
Yahoo
27-06-2025
- Business
- Yahoo
Home sales jump by a quarter month on month in May following April slump
The number of home sales picked up by a quarter month on month in May following a plunge in April as a stamp duty holiday ended, according to HM Revenue and Customs (HMRC) figures. Across the UK, around 81,470 home sales were recorded provisionally in May, which was 25% higher than April but a 12% fall compared with May 2024. Stamp duty discounts became less generous for some homebuyers from April, with people rushing to complete deals before the deadline. Stamp duty applies in England and Northern Ireland. HMRC's report said: 'The increase in transactions for May follows decreased transactions for April, which were likely brought forward into March to take advantage of the higher thresholds.' Tom Bill, head of UK residential research at Knight Frank, said: 'Housing transactions are still clambering back to normal levels after the stamp duty cliff-edge earlier this year.' He added: 'One thing slowing down the process is the vast quantity of stock on the market, which means asking prices need to be kept realistic to trigger activity. 'At this halfway point in the year, the tariff and stamp duty chaos are largely behind us, but tax rise speculation ahead of the Budget could see some buyer hesitation creep back in.' Nick Leeming, chairman of Jackson-Stops, said: 'In the current market, it's essential for sellers to remember there is always demand for a sensibly-priced property.' Nathan Emerson, chief executive officer of property professionals' body Propertymark, said: 'We have seen positivity regarding the number of properties coming to the market.' Richard Donnell, executive director at Zoopla, said data from the website indicates that 'new sales are being agreed at the fastest rate for four years, as more homes for sale means more buyers in the market, with the stamp duty changes in the distant past in the minds of home buyers'. He said: 'The market remains on track for 1.15 million sales in 2025, up 5% on 2024 levels as more households move home.' Amy Reynolds, head of sales at London-based estate agent Antony Roberts, said: 'The spring/summer market is traditionally a time when people prefer to move and this is being reflected in transaction numbers. 'There's plenty of desire to buy in the core price ranges and we're also seeing a rise in first-time buyer activity, even though the stamp duty holiday has ended. 'Many are receiving help from family and being driven by pressures in the rental market, where demand far exceeds supply and rental listings have dropped sharply.' Mark Harris, chief executive of mortgage broker SPF Private Clients, said: 'Transaction numbers have risen again as (Bank of England) base rate reductions encourage activity and enable borrowers to plan ahead with more confidence. 'We expect interest rates to fall further from their current level although the pace and size of cuts may be more gradual than the markets thought only a few weeks ago as a result of higher inflation and the wider economic picture. 'In the meantime, lenders continue to trim their mortgage rates as swap rates fall. Easing of criteria should also enable borrowers take on bigger mortgages in coming months.' Several mortgage lenders have recently announced changes to their affordability criteria, enabling some borrowers to take out bigger loans. This follows clarification from the Financial Conduct Authority (FCA), which also launched a discussion paper this week inviting debate on the future of the mortgage market to help support borrowers. Tony Hall, head of business development at Saffron for Intermediaries, said: 'Looking ahead, there are reasons to remain optimistic. 'With summer demand building and more homes coming to market, conditions are gradually shifting in buyers' favour as we move into the second half of the year.' Kevin Roberts, managing director of L&G's mortgage services business, said: 'Today's figures are encouraging for the industry, especially after the flurry of activity we saw in March to beat the stamp duty changes deadline.' Iain McKenzie, chief executive of the Guild of Property Professionals, said: 'The rush to complete in March created an artificial lull, but we are now seeing the return of genuine, underlying demand.' He continued: 'The recent (Bank of England base rate) cut to 4.25% has provided a welcome boost to buyer affordability. 'However, the most significant catalyst is the relaxation of affordability criteria from lenders. By enabling buyers to borrow more and stress-testing against more realistic rates, lenders have unlocked a new wave of purchasing power, playing a crucial role in driving these transactions forward.' He added: 'Buyers now have more choice than they've had for years, which is helping to keep price growth sustainable.'
The Independent
27-06-2025
- Business
- The Independent
Home sales jump by a quarter month on month in May following April slump
The number of home sales picked up by a quarter month on month in May following a plunge in April as a stamp duty holiday ended, according to HM Revenue and Customs (HMRC) figures. Across the UK, around 81,470 home sales were recorded provisionally in May, which was 25% higher than April but a 12% fall compared with May 2024. Stamp duty discounts became less generous for some homebuyers from April, with people rushing to complete deals before the deadline. Stamp duty applies in England and Northern Ireland. HMRC's report said: 'The increase in transactions for May follows decreased transactions for April, which were likely brought forward into March to take advantage of the higher thresholds.' Tom Bill, head of UK residential research at Knight Frank, said: 'Housing transactions are still clambering back to normal levels after the stamp duty cliff-edge earlier this year.' He added: 'One thing slowing down the process is the vast quantity of stock on the market, which means asking prices need to be kept realistic to trigger activity. 'At this halfway point in the year, the tariff and stamp duty chaos are largely behind us, but tax rise speculation ahead of the Budget could see some buyer hesitation creep back in.' Nick Leeming, chairman of Jackson-Stops, said: 'In the current market, it's essential for sellers to remember there is always demand for a sensibly-priced property.' Nathan Emerson, chief executive officer of property professionals' body Propertymark, said: 'We have seen positivity regarding the number of properties coming to the market.' Richard Donnell, executive director at Zoopla, said data from the website indicates that 'new sales are being agreed at the fastest rate for four years, as more homes for sale means more buyers in the market, with the stamp duty changes in the distant past in the minds of home buyers'. He said: 'The market remains on track for 1.15 million sales in 2025, up 5% on 2024 levels as more households move home.' Amy Reynolds, head of sales at London-based estate agent Antony Roberts, said: 'The spring/summer market is traditionally a time when people prefer to move and this is being reflected in transaction numbers. 'There's plenty of desire to buy in the core price ranges and we're also seeing a rise in first-time buyer activity, even though the stamp duty holiday has ended. 'Many are receiving help from family and being driven by pressures in the rental market, where demand far exceeds supply and rental listings have dropped sharply.' Mark Harris, chief executive of mortgage broker SPF Private Clients, said: 'Transaction numbers have risen again as (Bank of England) base rate reductions encourage activity and enable borrowers to plan ahead with more confidence. 'We expect interest rates to fall further from their current level although the pace and size of cuts may be more gradual than the markets thought only a few weeks ago as a result of higher inflation and the wider economic picture. 'In the meantime, lenders continue to trim their mortgage rates as swap rates fall. Easing of criteria should also enable borrowers take on bigger mortgages in coming months.' Several mortgage lenders have recently announced changes to their affordability criteria, enabling some borrowers to take out bigger loans. This follows clarification from the Financial Conduct Authority (FCA), which also launched a discussion paper this week inviting debate on the future of the mortgage market to help support borrowers. Tony Hall, head of business development at Saffron for Intermediaries, said: 'Looking ahead, there are reasons to remain optimistic. 'With summer demand building and more homes coming to market, conditions are gradually shifting in buyers' favour as we move into the second half of the year.' Kevin Roberts, managing director of L&G's mortgage services business, said: 'Today's figures are encouraging for the industry, especially after the flurry of activity we saw in March to beat the stamp duty changes deadline.'
Daily Telegraph
23-06-2025
- Business
- Daily Telegraph
Calls to lift NSW stamp duty exemption limit
ANALYSIS With the NSW Budget for 2025–26 to be announced tomorrow, the government's policy decisions on housing are already locked in. But whatever is unveiled, one thing is clear: it's the bank of mum and dad that's already stepping up to support first home buyers. At Loan Market, we've seen guarantor-backed pre-approvals for first home buyers in NSW more than double in the past year. Around 11 per cent of these now involve a parent using their home as security, up from just 5 per cent a year ago. It's a clear signal: more young Australians are leaning on their families, not because they want to but because they have to. MORE: Refinance at the right time to save big And the challenge goes well beyond house prices. Since 2020, rent in Sydney has jumped 44 per cent, while groceries have increased by 27 per cent at the checkout and other costs, like car insurance have soared by more than 40 per cent. These are everyday pressures, not luxuries, and they're making it even harder for people to save. At the same time, seasoned investors have returned to the market with confidence. At Loan Market, we've seen a 31 per cent rise in investor loans year-on-year. If the government is serious about helping first home buyers, the conversation can't stop at housing supply. Stamp duty is one of the biggest upfront costs they face and it's stopping many from even getting close. MORE: Surprise reason you can be black-listed by a bank Right now, full stamp duty exemptions only apply to properties under $800,000, with partial concessions up to $1 million. That might have worked once, but those numbers don't reflect today's reality. Sydney's median house price sits at $1.46 million, according to PropTrack data. Even the median unit price is $820,000, already above the current threshold. Take a couple trying to buy their first apartment at that median price. If they tip over the $800,000 limit, they could be hit with nearly $33,000 in stamp duty. That's on top of their deposit, legal costs, and moving expenses. And if they're hoping to buy a house in Sydney? The median puts any stamp duty support completely out of reach. Some suggest buyers should just look further out. But for many with jobs in the city, family nearby, and deep community ties moving over 40 minutes away simply isn't realistic or fair. More and more, we're seeing first home buyers invest interstate instead, renting out the property while building equity. It's a smart move in tough conditions but it's also a sign of a broken system. Raising the full exemption threshold to $1.5 million, closer to real-world property prices, would make a genuine difference. Buyers would still need to pass strict lender serviceability tests, including a 3 per cent buffer. But it would ease one of the biggest barriers they face. And we can't forget the broader picture. First home buyers keep the market moving. When they step in, others can upsize, downsize or move where they need. When they're shut out, it slows everything down. MORE: Where super is outperforming house price growth Of course, not everyone has parents who can help. And even when they do, it often comes at a cost like delaying retirement, putting travel plans on hold, or shelving downsizing. That's where great brokers make a real difference. They help structure a pathway to reduce the debt and remove the guarantor as soon as it's viable. It's not about cutting corners, it's about smart, sustainable solutions. There's also a case for stamp duty exemptions or concessions to be given to retirees, as well. If empty nesters were encouraged to downsize from their large family homes, there would be more supply in the market for families looking to upsize. Greater supply in the market provides more choice and sustainability in prices. Stamp duty reform has been debated for years. The question now is whether tomorrow's budget will finally shift from talk to action. This isn't just a policy choice. It's an opportunity to back Australians who are doing everything right – working hard, saving hard, and leaning on family when there's no other option. It's time to support the parents who've been carrying the load, and the next generation trying to find their place in the market. It's time to turn intent into action. Here's hoping this budget delivers for those working hardest to get their start or for young Australians to get the same opportunities like others before them. David McQueen is Loan Market CEO
