A Mortgage Now - Blog
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Saving the planet? |
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The press are telling us today that a new tax being considered by the Government could add £850 to the cost of buying a typical home.
A 0.5% stamp duty increase would apply when purchasing a home with a poor energy rating (F or G in a rating range of A to G). Apparently you may be able to claim twice the charge back if you sharply improved the rating within a year. Since building estimates to achieve this improvement are being quoted at £15,000, it looks like you will only need to save £14,150 in energy bills to be ahead on the deal. So what are the practicalities of such a scheme? Which properties are most likely to be affected? Global warning was not on the agenda before twenty years ago which puts the majority of UK housing stock into the low energy efficiency category. I don’t know about you, but I can’t remember the last time I saw a Georgian property with double glazing and a solar panel. Which properties are least likely to be affected? Homes built this century are in with a fighting chance of showing a good energy rating. Since the bulk of these are flats and starter homes for first time buyers they won’t fall into the trap. In any even the living rooms on most starter homes are so small you can heat them with a disposable lighter. Why do it? Don’t laugh – the official line is it would be part of a government programme to cut greenhouse emissions by 34% from their 1990 levels, by 2020. Not just about raising cash then? What alternatives are there? How about a tax for having nasty purple painted brickwork, a burned out Ford Sierra in the drive, or a pit bull terrier on the front lawn. This would make a more positive impact on the environment and is probably a little more realistic. |
Election day and the mortgage market |
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Today is a big day for the country. After an enormous hammering for the mortgage and property markets over the past thirty three months, which of the major parties has the most favourable policies for our visitors at A Mortgage Now?
LABOUR We have seen stamp duty removed for first time buyers up to £250,000 in the budget. Not much else to add from the Labour party. LIBERAL DEMOCRATS Removal of Home Information Packs and a one precent 'Mansion Tax' on £2M plus properties CONSERVATIVES Removal of Home Information Packs and the suggestion of permanent raising of stamp duty threshold to £250,000 for first time buyers. Nothing from any of these parties to get excited about. Home Information Packs have been a 'white elephant' from day one and we wont miss them. Does the removal of stamp duty for first time buyers really make much difference to the market? In reality it means that a minimum cash war chest for a first time buyer is 10% (deposit only) rather than 11% (deposit and stamp duty). More posturing than practical. All we can hope is that the new Government will show more imagination when handling the challanges of our economy, than they are demonstrating in the property market. |
Stamp Duty - more information |
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Since the Chancellor announced Stamp Duty Land Tax changes for First Time Buyers in his budget of 24th March 2010, we have been inundated with further questions.
We have now seen a technical note issued by HM Customs and Revenue which answers many of these queries. Here are some key points: The Stamp Duty Land Tax relief applies to first time buyers of residential property which the buyers intend to use as their only, or main home. The relief is available for purchases between 25th March 2010 and 24th March 2012 inclusive. Question: What is a first time buyer? A person who has not acquired a freehold or leasehold interest in residential property in the UK, or an equivalent interest anywhere in the world. All of the buyers, where there is more than one, must be a 'First Time Buyer'. Question: I previously bought with my ex partner but we split, can I now be a 'First Time Buyer'? No - you do not qualify for Stamp Duty Land Tax relief under this scheme Question: I inherited a property, but did not buy it, do I qualify as a 'First Time Buyer'? No - you do not qualify for Stamp Duty Land Tax relief under this scheme Question: Can I claim the relief if I am buying on behalf of my parents? No - you do not qualify for Stamp Duty Land Tax relief under this scheme Question: Is there an age limit on qualifying for the scheme? No - there is no age limit on qualification Question: Can I claim relief on a shared ownership purchase? Only if a 'market value election' is made Question: I bought before 25th March 2010, can I claim back my Stamp Duty No - Retrospective claims are not possible please note that the points above are our interpretation of the Government guidleines available here We cannot accept responsibility for misinterpretation of the rules buy our site visitors or their representatives. If in doubt, consult your conveyancing solicitor. For information on rule changes for purchases of £300,000 and over click here. |
Stamp Duty Changes |
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I am always endlessly surprised but the volume and variety of questions we get after budget news that affects our market. Such is the case with Stamp Duty changes this afternoon.
Here are some answers to some of the questions we have had in: What is a first time buyer? - someone buying for the first time would qualify. Someone who has had a property in the past but does not have one currently, we suspect so, but have not had this clarified yet. Does the £250,000 zero limit apply to second time buyers - nice try, no it doesn't I am signing contracts, will I qualify for the new zero rate band - yes if you do not complete before midnight tonight (24th march) When does new the 5% rate come in - April 2011 (residential property only over £1m) What is SDLT rate for prices higher than £250,000 - still 3% or 4% (over £500,000). Only the £125,001 to £250,000 range for is changing and then only for first time buyers For full stamp duty land tax rates see our mortgage school page Click here to mitigate your stamp duty land tax bill on properties over £300,000. Thats it for now - good news for first time buyers completing next month - bad news for those who completed this month. |
Why don't they want me? |
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Our new enquirer was a Teacher and was concerned.
'I am in a steady job on a regular income - why wont another Lender take on my mortgage?' She had just come off a fixed rate with her current Lender and had been offered a standard variable rate of 5.4% when base rate was 0.5%. She was understandably miffed. Particularly as she knew the Lender concerned was still in business only due to the taxpayer. Given a competitive fixed rate she would have taken it and provided one more small island of certainty in a sea of troubles. The reality is that Lenders in today's market have restricted cash supply to lend against the level demand they receive. They therefore pick and choose who they will take and a client with only 10% equity is not even on the radar. The Government are running these Lenders with a view to recouping our investment as quickly as possible. Since we, the taxpayers, are providing the cash, perhaps we have a case when we ask to be dealt a decent hand once in a while. Would it hurt the overall picture too much to help the man in the street a little more and consider political expediency of less value? |
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