It’s springtime and on a positive note, we have seen market activity in North West London increase gradually over the last month. Here is a short recapitulation of the latest news for property owners and landlords located in Hampstead, Belsize Park, West Hampstead, Hampstead Garden Suburb, Finchley, East Finchley and Highgate:
STAMP DUTY TAX (SDLT) HOLIDAY
In a bid to stimulate property demand, The Government has announced in March that the Stamp Duty (SDLT) holiday – due to end 31st March – is extended until the 30th June 2021. The extension means to prevent tens of thousands of property transactions to fall through. Residential buyers, whether first-time buyers or not, do not pay stamp duty on homes of less than £500,000. The tax holiday also offers temporary discounts on higher purchases:
- From £500,001 to £925,000: 5% SDLT is payable
- From £925,001 to £1,500,000: 10% SDLT
- £1,500,001 and up: 12% SDLT
You can use the following SDLT calculator to work out your tax amount.
From the 1st July 2021 to the 30th September 2021, the threshold for starting to pay SDLT is lowered by half to £250,000. This only applies to first-time buyers.
- From £250,001 to £925,000: 5% SDLT is due
- From £925,001 to £1,500,000: 10% SDLT
- £1,500,001 and up: 12% SDLT
The rates are 3% higher for buyers with additional or previous properties. However, if you sell a home within three years of purchasing a second property, you can apply for a refund of that 3%. It is also possible under some circumstances to claim multiple dwellings relief.
From the 1st October 2021, the threshold reverts to £125,000 and the extra 3% still applies for landlords and second home buyers.
2% STAMP DUTY SURCHARGE FOR NON-UK RESIDENT BUYERS
From the 1st April 2021, a 2% stamp duty surcharge applies to any residential property transaction in England and Northern Ireland where the purchaser is not a UK resident or if the purchaser is a UK company controlled by non-UK residents.
Individual buyers are non-UK resident in relation to the transaction if they are not present in the UK for at least 183 days during the 12 months before their purchase or completion date. When buying with someone else, if any of the individual buyers is non-UK resident in relation to the transaction, then all buyers are treated as non-UK resident in relation to the transaction. Individual purchasers may be able to claim a refund of the 2% surcharge if they meet residency requirements within a 12-month period after the effective date of transaction.
You can read more information and find examples here.
The 2% surcharge applies on top of all other residential rates of SDLT, including zero rates and the rates which apply to first-time buyers, purchasers of additional dwellings, purchases made by companies and purchases where the consideration exceeds the higher rate threshold.
- 2% up to £125,000
- 4% from £125,001 to £250,00
- 7% from £250,001 to £925,000
- 12% from £925,001 to £1,500,000
- 14% from £1,500,001 and up
The tax must be paid to HMRC within 14 days of the purchase transaction date.
ELECTRICAL SAFETY CERTIFICATES FOR RENTED PROPERTIES
Like the Energy Performance Certificate (EPC), the Electrical Safety Certificate is a legal requirement for all existing tenancies from the 1st of April 2021. A new certificate must be given to the tenant within 28 days of the inspection. Failure to produce this document at the start of any new tenancy or within the required timeline will invalidate any future eviction notice.
The document is obtained after a thorough inspection by a NAPIT or NICEIC qualified electrician in compliance with the 18th edition of the wiring regulations. It is valid for 5 years. All fixed electrical installations (such as light sockets, plug sockets, fridge/freezers, ovens, etc) are tested and must be maintained on a regular basis.
If remedial work is recommended, this has to be carried out within 28 days or within the specified time frame. A landlord or letting agent will not be in breach of their duty to comply with a remedial notice – for example if they cannot find a qualified person or a tenant denies them access to the property – if they can show they have taken all reasonable steps to comply.
Newly-built properties benefit from an Electrical Installation Certificate (EIC), valid for five years and provided during the purchase.
FURTHER EXTENSION TO BAN ON EVICTIONS
The ban on bailif enforced evictions in England has been extended to 31st of May 2021, until further notice. This extension applies to the necessity for landlords to give a 6-months notice period to tenants, before starting any eviction process.
Exemptions are in place to protect communities, neighbours and landlords in case of serious and urgent circumstances such as:
- illegal occupation
- false statement
- anti-social behaviour
- domestic abuse
- extreme rent arrears
Tenants in financial difficulty should contact their local Council to access funding through Discretionary Housing Payments. We strongly recommend to landlords and tenants to keep communicating and help each other, as much as possible during the pandemic.
GREEN HOME GRANT SCHEME TERMINATED
The Green Homes Grant Voucher Scheme launched last year has closed to new applications on 31 March 2021, one year earlier than planned. The scheme was designed to provide a short-term economic boost to create jobs while tackling greenhouse gas emissions.
It offered grants of up to £5,000 or £10,000 to put in insulation or low-carbon heating. But a botched set up from the start has led to poor success. Households had to register with the scheme in order to receive vouchers redeemable with approved builders and traders but found access to information difficult. And because of red tape, too few builders and traders managed to join the scheme resulting in a lack of workforce available for the demand. Applications made before the end of March deadline will be honoured and any vouchers already issued may be extended upon request.
Following this failure, the Government has announced an extra £300m directed towards helping people on low-incomes (with revenues less than £30,000 a year) gain access to energy efficiency improvements through local authorities.
But this seems to leave households on moderate incomes without any government help. More information to come.
Another scheme to look at to help fund heating cost reduction improvements is the Energy Company Obligation, where energy companies finance the upgrade of insulation and heating systems under certain criteria.
LONDON SALE AND LETTING MARKET
After a long confined winter, we have seen in the past 2 months a regain of activity among buyers and tenants in London. This is partly thanks to the stamp duty holiday extension, cheaper mortgages, the return of sunny longer days and the pressing need for more space and outdoor space.
2020 ended with a robust level of sale transactions in the last three consecutive months, but January saw a dramatic drop by up to 80% in some North West London postcodes. This means that the drop in demand happened at least 3 months before, in October 2020. Since then, the inventory has continued to increase while the demand has returned. We have seen a flurry of signboards erected throughout London announcing fresh new stock and many estate agents record higher levels of enquiries for properties for sale and to let.
Nationwide has announced that London annual price growth in the first three months of 2021 has slowed to 4.8% from 6.2% in the last quarter of 2020. The overall growth in February 2021 compared to a year ago is 2.3% and varies depending on the type of properties and the postcodes. It has been slower for Central London than for Greater London. North West London has benefitted from a higher growth than Central London for example, following the exodus of buyers and tenants from Central London looking for more space, outdoor space, less noise and pollution. But let’s remember that values and selling prices depend on what is on the market at that time and that these average increases do not equally apply to all types of properties. If the inventory in North West London continues to increase and the offer exceeds the demand, selling prices will level down.
|VALUE CHANGE YOY||+4.5%||+6.3%||+5%||+3%||+5.95%||+3.5%|
According to the latest DPS Rent Index Report, 2020 has seen the emergence of a trend towards increased rental growth for larger homes with outdoor space compared to smaller property types without outdoor space, certainly driven by homeworking and demand for more spacious housing. This trend has continued through Q4 2020 and is expected to last throughout 2021. London rents have nevertheless fallen by 2% compared to Q4 2019 and by 0.38% compared to Q3 2020. London remains the most expensive place to rent, both for average rental value (£1,317), and for rent as a percentage of average income (38.83%).
The Inner London area, in particular, has seen rents fall £54 (-3.77%) in 2020, whilst Outer London saw a modest £1 (0.08%) rise. The disparity between average rent growth for Inner and Outer London may be further evidence of the desire to move away from city centre locations. Since the pandemic, between 8 and 10% of the London population has left either to other parts of the UK or back home, which has affected the demand in the Capital. North West London rents are expected to stagnate or increase slightly throughout 2021.
Sources: Zoopla, The Guardian, DPS, ONS, The Financial Times
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