Stamp Duty Changes and Dorset Property Market Update

By Grant Brooks – MD Edwards Estate Agents

Largest increase in UK house prices in 19 years

The Office for National Statistics (ONS), the UK’s largest independent producer of official statistics and its recognised national statistical institute, in a recently published report confirmed the average UK house price jumped by 15.5 per cent annually in July, the largest increase since May 2003.

July 2022 – 15.5% increase in average UK house prices

The 15.5 per cent increase in July represents almost double the increase recorded in June, where typically property values saw 7.8% increase annually to that date. The ONS noted that this was the highest recorded percentage house price increase in 19 years.

Such a significant increase in annual house price inflation is attributed by the ONS to the ‘base effect’ from the falls in house prices recorded at the same time last year, due to the changes in the stamp duty holiday.

Increases real terms

In terms of monetary values, the average annual house price increased by £6k from June to July 2022, this compares to a £13k fall for the same period in the previous year. Nationally, the average house price across the whole of the UK in July 2022 was £292,000, which equates to £39k higher than at the same time in 2021.

In England, the average figure is £314,000, which represents a 16.4% annual increase.

Local house price increases

The ONS segments data into regions, locally we fall into the South West region.

The South West was the region with the highest annual house price growth, with average prices increasing by 20.7% in the year to July 2022. This was up from a growth rate of 7.8% in June 2022.

The outlook

We shouldn’t get too carried away by the strong growth shown in the ONS report, the reality, also confirmed in the report, is that this increase was a direct result of changes to the stamp duty holiday from the summer of 2021 and almost certainly shouldn’t be seen as a sign of continued significant growth.

With the widely reported rising interest rates and concerns about the increase in the cost of living, The outlook across the property market is uncertain when we are faced with these challenging times.

Stamp duty update – Stamp Duty Land Tax (SDLT)

In last Friday’s mini-budget, Chancellor Kwasi Kwarteng, announced the permanent changes to cut stamp duty tax in England and Northern Ireland for some buyers, this change comes into effect straight away.

The amount of stamp duty buyers pay depends on the purchase price of the property. The changes at which stamp duty is paid was doubled from the current £125,000 to £250,000.

The rates are now:

Up to £250,000 – Zero

The next £675,000 (the portion from £250,001 to £925,000) – 5%

The next £575,000 (the portion from £925,001 to £1.5 million) – 10%

The remaining amount (the portion above £1.5 million) – 12%

The chancellor added discounted stamp duty for first-time buyers.

If you’re buying your first home

You can claim a discount (relief) if the property you buy is your first home. This means you’ll pay:

no SDLT up to £425,000

5% SDLT on the portion from £425,001 to £625,000

You’re eligible if you and anyone else you’re buying with are first-time buyers.

Source – Gov.uk

The local market

Across our network of offices in Dorest we have seen a more traditional start to the Autumn property market, with an increase of stock coming to the market with sellers looking to move home before the Christmas festivities.

Here is a selection of recently listed properties –