So a month has passed since the Chancellor delivered his budget, and we shouldn’t be surprised that we are no longer discussing its long term implications for the housing market. In times of such austerity, few were shocked that it would include measures to add to the exchequers coffers. And by increasing the upper level of stamp duty for those breaching the 2 million pound threshold, from 5% to 7 %, he has done just that.
Now there’s an argument to suggest that those spending that sort of money will find little hardship in digging deeper into their cashmere line pockets. They’ll have to find at least an extra £40k in cash for the purchase. But the reality is, almost everyone feels the pinch when they have to find extra cash – especially with that many zeros before the decimal place. Moreover, I think it’s probably not just the buyers, but the owners of such substantial properties who may well be breathing a sigh of relief: the alternative, an annual levy based on size or value of the property, could have had a much bigger and longer term impact on the cost of ownership of such desirable piles.
Of course it’s quite likely that buyers on the edge of the £2 mill price bracket will be pushed below the magic figure, therefore creating demand for less expensive houses – especially in London – which will eventually lead to an increase in values.
One thing we can be certain of, any rise in the cost of the transfer of houses will lead to longer term ownership. Long gone are the days of people trading houses like commodities. We are once again looking at our properties as assets to be held on to, or better still homes to be lived in. Going hand in hand with this, many of us are looking to “improve and not move”. But this is no short term trend. Over the past decade 50% more of us have undertaken plans for renovation projects. But why?
That’s exactly the question I asked all 15 couples in my new Series ‘Make My Home Bigger’ and the answer was always twofold.
Firstly, people quoted the exorbitant cost of moving house. Most would have been looking to move to properties with a value in excess of £250k, so they’d be paying at least 3% stamp duty (let’s not forget that this will need to be cash), and for those homeowners living in the South-East considerably more. Plus there is then the cost of estate agents fees, solicitors fees and removal costs. A princely sum to add to the increased monthly expense of a bigger mortgage for a bigger house.
Then there is the stat that the average renovation or extension can add around 11% to the value of a home. So add the costs saved to the added value of the house and you’ve reason enough to consider such a project. The final straw however, the X-Factor, the ultimate reason they gave was that their property was a family home, a house where they and their family lived, in an area they loved. Hard to argue against. But the manner in which these people went about their respective projects varied hugely, which you can see for yourself when the program starts on the Home channel on May 7th.
