Publish on: July 14, 2020
Homebuyers that save lots of money thanks to the recently-announced stamp duty holiday could put their cash to good use by redecorating their new abode.
There are likely to be several benefits to the tax cut, which was revealed by Chancellor of the Exchequer Rishi Sunak in his Mini Budget last week.
He announced plans to increase the threshold from £125,000 to £500,000 on a temporary basis in a bid to help homebuyers purchase their dream house to boost the property market, as it has suffered considerably since lockdown began at the end of March.
This means those planning to purchase a property worth £500,000 will be able to save as much as £15,000 on the stamp duty land tax (SDLT) until March 31st 2021, giving them impetus to purchase a property sooner rather than later.
Mr Sunak stated: “The average stamp duty bill will fall by £4,500. And nearly nine out of ten people buying a main home this year, will pay no stamp duty at all.”
He emphasised the intention behind the SDLT changes, telling the House of Commons property prices have fallen for the first time in eight years and transactions dropped by 50 per cent in May, demonstrating the sector desperately needs a boost.
“Uncertainty abounds in the market – a market we need to be thriving. We need people feeling confident – confident to buy, sell, renovate, move and improve,” the Chancellor said.
Not only will this cause a surge in interest for houses for sale and encourage homeowners to put theirs on the market, it could also be good news for the DIY sector as well.
Those who manage to take advantage of the tax reduction will have more spare cash to spend on redecorating their new abode according to their taste, so they are able to make it really feel like their home without having to save for renovations first.
This also means properties that need updating become more desirable to homebuyers, as they will have more available cash to consider hiring luxury interior designers in London to turn it into their dream home, fit a new kitchen or install a stylish new bathroom.
By doing this, they are likely to be able to buy a house far larger than they would have been able to before, as a property that needs updating is likely to be less expensive than one that has already been redecorated.
Not only does this give buyers the chance to create their ideal home, but it also enables them to add value to their new asset.
Indeed, according to Ideal Home, making changes such as fitting a new bathroom, converting the loft, opening up the living space, and landscaping gardens can add thousands of pounds to the asking price of a property.
The renovation that adds most value is transforming the garage into a living area, spare room or gym, increasing the price of a house by an average of £29,023. As the cost of converting it is typically £10,720, this means homeowners could earn a profit of £18,303.
