BEST Investments UK – Part 3

Frank Schwartz – HULT Private Capital

Frank Schwartz – HULT Private Capital

BEST Investments UK – PART 3

How will the stamp duty holiday affect people buying their main home?

Property price Stamp duty before 8 July After 8 July Saving
£100,000 £0 £0 £0
£200,000 £1,500 £0 £1,500
£400,000 £10,000 £0 £10,000
£500,000 £15,000 £0 £15,000
£700,000 £25,000 £10,000 £15,000
£1m £43,750 £28,750 £15,000
£2m £153,750 £138,750 £15,000

What factors have lead to the turn in the London market and will continue to have a longterm effect?

During the COVID crisis, the wealthy were not as economically hurt to the same extent of those in lower economic categories.  Many of them had to switch to work from home, but did not lose jobs, and much of their investments were defended by the actions of governments and central banks.

Bank of England 

The Bank of England made a few moves that specifically help the housing market, and these moves will continue to make it healthy until they are pulled back.  On March 19th at its special Monetary Policy Committee meeting, the BoE began its COVID aid, by lowering interest rates to 0.1%.  Lowering of interest rates means cheaper loans for businesses and households, and thus makes overall property purchase costs much lower for those less affected by the pandemic.  This rate lowering was incorporated with the BoE’s Term Funding Scheme, which supplied additional funding to banks and building societies offering long-term financing at interest rates at, or close to, 0.1%, with the goal of passing those low-interest rates on to the home buyers.  The BoE was also providing additional support through the scheme to banks that offer more lending to small and medium-sized companies.  

Through their COVID Corporate Finance Facility, the BoE also worked closely with H.M. Government to support large businesses offering cash for their corporate debt.  This prop for the economy was sold to the populace to “help to keep paying wages and their suppliers, even if they have serious cash flow problems.”  We have seen that the result kept large companies afloat, stocks in check after a large loss, and an increase in high-end real estate buying.  

 

For update on stamp duty please see: https://www.theguardian.com/money/2021/feb/24/extension-stamp-duty-holiday-sales-rishi-sunak-tax-england

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