Speaking at the summer economic update, the Chancellor Rishi Sunak confirmed plans for a major cut in stamp duty. In a bid to boost the housing market, as of July 8, house buyers no longer have to pay stamp duty on properties up to £500,000 in England and Northern Ireland.
The ‘stamp duty holiday’ will run until March 31, 2021. The move means that the average stamp duty bill will decrease by £4,500 and nine out of ten purchases will no longer be required to pay stamp duty.
What impact will the Chancellor’s temporarily overhaul of stamp duty have on residential insurance?
New homeowners
The post-lockdown housing market is reported to be picking up where it left off in early 2020. Rightmove reports that in July so far, buyer enquiries were up 75% on the same period in 2019. Furthermore, around 44% of properties that have come on the market since May 13 are now under offer. The increase in buyer activity is being pinned on a rush for buyers to take advantage of the stamp duty holiday.
The bid to buy property to capitalise on the temporary lull in stamp duty for property up to £500,000, will be accompanied with a surge in buyers requiring residential insurance.
A ‘huge opportunity’ for landlords
The stamp duty holiday applies to second home and buy-to-let landlords, while the 3% sur-charge will remain in place. The tax break for landlords has been labelled as providing a “huge opportunity” for buy-to-let investors to expand their portfolios.
For new landlords entering the market and existing ones expanding their portfolio, it’s vital the right insurance is in place to protect both landlords and tenants.
Increased enquiries
With homebuyers and landlords poised to flock to the market to capitalise on what is potentially a huge saving, insurers should be ready for a surge in enquiries related to residential insurance.
