The sun appears to have finally come out of hiding and, with spring now very much upon us, the local property market has continued to bloom. Last month at MOV8 we had more properties go under offer than during any month since we opened our doors almost 8 years ago. Sales during March were up by 36% on the previous month and up by over 50% on an annual basis.
A strengthening economy and improved mortgage availability have combined to help boost consumer confidence over the last year and a half and we’re now seeing more and more people who had been delaying moving home, now coming back to the market.
The rising demand for property naturally puts an upward pressure on selling prices, as more buyers are having to bid above the Home Report valuation to secure their new home. We have seen the number of homes coming onto the market rising and it will be important that this continues to happen in the months ahead to ensure that house price inflation does not rise too quickly.
A New Month, A New Tax System
After much discussion, Land & Buildings Transaction Tax (LBTT) was finally introduced on 1 April 2015, replacing the old Stamp Duty system. Most people will benefit under the new system, with a significant majority of buyers paying no tax or facing a lower bill than they would have under Stamp Duty.
Once you get over the £333,000 mark, the amount of tax paid under LBTT exceeds what would have been paid with Stamp Duty. As you’d expect, that led to a rush of sales at the upper end of the market immediately prior to the introduction of LBTT, with buyers looking to minimise the amount of tax they pay. In the coming weeks we’d expect to see a corresponding lull in activity in the market for larger homes before things return to normal later in the summer.
More Help To Buy
The big news in last month’s Budget, at least as far as the property market is concerned, was the announcement of Help To Buy ISAs. The scheme allows first-time buyers to save up to £200 per month in the ISA, with the government topping this up with a further 25%. That is to say, the government contributes £50 for every £200 saved.
The aim of the scheme is to help more people to get onto the property ladder, and in that respect, it is likely to be successful. Going forward, it’s equally important that we see more efforts being made to increase the number of new, affordable homes being built. The number of households across Edinburgh and the Lothians is projected to rise significantly in coming years, and it’s important that we build enough properties to meet this demand.
The new Help To Buy ISAs don’t come into effect until the autumn and before then there is the small matter of a general election to contend with in May. Housing may not have been front and centre during campaigning so far but we have seen most of the major parties acknowledging the importance of the issue.
The Conservatives have set a target of building 200,000 starter homes which would be sold at a 20% discount for first-time buyers under the age of 40, with Labour setting a target of 200,000 new homes per year by 2020 supported by a Help-to-Build scheme designed to allow SMEs to benefit from low-cost lending supported by treasury guarantees.
The Liberal Democrats announced plans for a Rent to Own scheme to help first-time buyers get onto the property ladder, along with a target of building 300,000 new homes per year – a level of new-build activity that has not been seen since the 70s. And last, but by no means least, the SNP has set a target of 100,000 affordable homes being built per annum along with continued support for the Help to Buy scheme.
Despite the various targets being set and the slightly different means proposed to achieve these, there is a common underlying theme here. All of the parties recognise a need to increase the level of housing supply to meet demand while offering support to first time buyers.
Of course, recognising that there is a need for new housing is not really news to anyone: the number of households across the UK has been rising more quickly than the rate at which we are building homes for some years and, to date, it is a problem that has not been tackled successfully. With more of us now living longer, the issue of housing supply is only likely to grow in prominence so, if nothing else, it is heartening to see the parties making the right noises about tackling the issue.
Next month we’ll be back with our usual round-up of everything that’s happening in the local market at which point we’ll also be able to take a look back on the result of the election and what it will mean for buyers and sellers.
Until then, if you have any queries about buying or selling or want to speak to us about getting your home on the market, get in touch today on 0345 646 0208 and one of our expert team will be delighted to help.