The Stamp Duty Land Tax (Temporary Relief) Act was introduced by the government in July 2020 to combat the weight of the COVID 19 Pandemic on the housing market. Now, a year later, and nearly 4 months after Stamp Duty began its slow return to normal rates, our data shows that first time buyers are paying up to 31.5% more for properties across England.

### What is the Stamp Duty Holiday (Stamp Duty Land Tax Temporary Relief Act)?

To prevent COVID 19 Pandemic from devastating the housing market, the government intervened with the Stamp Duty Land Tax (Temporary Relief) Act. The Act, also known as the Stamp Duty Holiday, suspended and altered some of the existing rates for SDLT to incite interest in the housing market and galvanise the economy. 

From 8th July 2020 to 30th June 2021, home buyers could pay highly reduced Stamp Duty rates, including zero tax on properties priced under £500,000.

* **Up to £500,000**: Zero SDLT
* **£500,001 to £925,000**: 5%
* **£925,001 to £1.5 million**: 10%
* **Above £1.5 million**: 12%

### How does the Stamp Duty Holiday affect house prices?

As Stamp Duty is a tax on home buyers - the lower the rates, the more money buyers have in their pockets. The holiday, coupled with the severe shortage of homes on the housing market, and a general lack of funds among average-wage home buyers, has made the demand for property skyrocket. With home sellers quick to take advantage of this situation, there’s been a big increase in property prices across the country.

If you’re interested in how house prices are looking in your area, check out our [free House Prices tool](https://www.getagent.co.uk/house-prices). It provides up-to-date information on average house prices as well as their average selling time.

### The average first time home buyer is paying 11.7% more

In July 2020 just before the SDLT holiday was introduced, the [average price of a first-time buyer home](https://www.getagent.co.uk/house-prices) was £212,166. However, our latest figures show the average first-time buyer home now costs £236,982, an increase of £24,816 or 11.7%.

### Biggest increases by region

The North West has seen the largest first-time buyer price increase by region, with the average first-time buyer now paying £168,820. That’s a 16.9% jump since July last year. 

Elsewhere in the north, Yorkshire and Humber have seen a rise of 14.8% and the North East has seen a rise of 13.4%. In the Midlands region, the West Midlands has seen a rise of 13% and the East Midlands a rise of 12.9%

* **East Midlands**: 12.92%
* **East of England**: 11.29%
* **London**: 5.28%
* **North East**: 13.41%
* **North West**: 16.90%
* **South East**: 8.94%
* **South West**: 11.28%
* **West Midlands**: 13.08%
* **Yorkshire and The Humber:** 14.77%
* **England**: 11.70%

### Biggest increases by local authority level

Richmondshire, North Yorkshire, has seen the largest increase in average price for a first-time buyer. Originally £178,974 in June 2020, today the average price has risen to £235,425, an increase of £56,451 or 31.5%

In Rossendale, Lancashire, the average first-time buyer property now costs £147,417, having risen 24.3% since the introduction of the SDLT holiday.

* **Richmondshire:** 31.54%
* **Rossendale:** 24.25%
* **North Norfolk:** 23.09%
* **North Devon:** 18.95%
* **Cotswold:** 18.06%
* **Hastings:** 17.94%
* **Shropshire:** 17.73%
* **West Devon:** 17.71%
* **Derbyshire Dales:** 17.62%
* **Salford:** 17.18%

### Are there any exceptions?

Not everywhere in England has seen a big increase in property price. In some of the more affluent areas of London, the average property price for first time buyers has dropped significantly.

In Kensington & Chelsea for example, the first time buyer’s home cost £1.1 million in July 2020. Now however, the price has dropped to just over £1 million, a decrease of - 6.5%. 

Other decreases include:

* **Hackney:** - 4.1%
* **City of London:** - 4%
* **City of Westminster:** -3% 
* **Southwark** -1.4%

### What the Stamp Duty Holiday means for first time home buyers

While the Stamp Duty Holiday has been a huge success in injecting life into a threatened housing market, it’s undeniable that first time buyers have been marginalised. While many existing homeowners have benefited from a boost to the value of their property, most first-time buyers are worse off when it comes to taking that first step onto the property ladder. 

### What is Stamp Duty?

Stamp Duty Land Tax or SDLT is a government tax on property and land transactions. The amount of tax you pay is proportionate to the amount of money you spend on property or land.

Young woman sitting at a desk with papers and thinking about taxes.

pexels-mikhail-nilov-6964107

A year after the Stamp Duty Holiday was introduced, our data shows that first time buyers are paying up to 31.5% more for properties across England.

First time buyers pay 31% more due to Stamp Duty Holiday

A year after the Stamp Duty Holiday was introduced, our data shows that first time buyers are paying up to 31.5% more for properties across England.


Buying a flat above a commercial premises has its benefits. They are usually cheaper than normal flats.  Plus, shops above flats are usually located in the heart of your village, town or city, which means you'll be living much closer to local amenities. Unfortunately, they also come with some downsides - fire safety hazards and noise problems to name a few. 

In this blog, we're going look at the merits of leasehold flats above commercial premises. Are they worth the hassle? What are the mortgage options for flats above shops?

### How are owners of flats above shops defined?

There are two types of property ownership in the UK: freehold and leasehold. A freehold owner is someone who owns their property outright, while a leasehold owner has the right to live in the property under terms of a lease agreement. This agreement usually lasts from 85 to 125 years.

Flats above shops are classed as leaseholds. In fact, most flats in the UK are defined as leaseholds. Leasehold arrangements provide a way to impose certain conditions on both the leaseholders and freeholders of properties. Shared areas can be maintained, while leaseholders are expected to contribute to the property's maintenance.

For more information on the differences between leaseholds and freeholds, check out [our blog](https://www.getagent.co.uk/blog/properties/leasehold-vs-freehold "Leasehold vs freehold").

### Is it worth buying a flat above a shop?

Unfortunately, no one can decide whether it's worth buying property but you. Properties above commercial premises have always found buyers, so they're obviously an attractive option to some. To help you decide, we've researched some pros and cons.

### Pros of buying a flat above a shop

**They are cheaper than standard flats**

First time buyers are often tempted by flats above shops because they're cheaper than standard flats. While their cheaper price is a clear pro, it's a result of their shortcomings. Furthermore, while flats above shops are cheaper, standard flats are more likely to grow in value over time.

If you're thinking of buying, it's worth knowing how much money you have to spend. You find out by getting a [free online house valuation](https://www.getagent.co.uk/online-valuation "GetAgent online valuation") with the GetAgent valuation tool.

**They are attractive to young tenants**

If you buy a flat above a shop, you could let out the property to young professionals or students. Young people are attracted to properties that are closer to local amenities, bars and restaurants.

**Please note:** If you are thinking of letting out your leasehold flat, you must check the terms of the lease agreement you have with the freeholder. They might prohibit you from subletting the property. We recommend always asking the freehold owner for permission. It's also worth nothing that if you're a leaseholder in London, you cannot let out your property for more than 90 days a year. 

**You can move somewhere you can afford**

As flats above shops are cheaper than ordinary flats, you could move to an area that would have initially been out of your price range. 

**Bigger rooms and windows**

Flats above shops, particularly in London, are usually of Victorian or Georgian heritage, which means they date back to the 1800s and 1900s. As a result, they have larger rooms and windows. This is a big plus for homeowners used to cramped living spaces and low ceilings.

### Cons of buying a flat above a shop

**Noise**

Flats above shops are usually located in the heart of the town or city. Unfortunately, this means you will have to deal with noise from all sides. If you're living above a main road, expect early mornings to be filled with noise from cars, shoppers and dog walkers. 

Another source of noise you'll have to deal with is from the premises below. How disruptive this will be depends on the type of business the owner is running. If it's a bar or restaurant, you can expect a greater level of noise than a store on the high street. 

If you're thinking of choosing a flat above a shop, make sure you investigate the type of premises below. If your job involves working late and unsociable hours, you may find it harder to sleep in the mornings and evenings because of the noise downstairs.

**Pests and odours**

If the business below the flat is a restaurant or bar, you may have to contend with pests like rats and cockroaches as a result of food waste. Another risk, especially if the chefs are cooking often, is odours. If it's a chicken shop, there will likely be grease and grill fumes. We recommend that you ensure the property is well ventilated before purchasing. 

**Increased fire safety hazard**

If you live above a restaurant or takeaway there will be chefs cooking below you, resulting in an increased fire safety hazard. 

**Access to your flat**

If you're lucky, the front door to the flat will be located on the street, but it's not unusual for flat owners to have to walk through the restaurant or shop to get to their front door. In a less ideal scenario, it could be at the end of a dark alleyway. These conditions can be unappealing, so make sure you're happy with the type of access you'll have.

Another access problem is parking - will you have your own parking space, or will you have to share with customers? Make sure you find out from the freehold owner.

**Future shop owners**

You might consider yourself a lucky neighbour if the premises below are a greengrocer or a clothes shop. In such a scenario, you wouldn't have to worry about late night noise and fumes. However, you should not take it for granted that the business will be there forever. There's a very real chance that the premises will change hands a year or two after you buy the flat, making your future much less clear.

**Getting a mortgage is difficult**

Mortgage lenders are less inclined to lend to buyers of flats above shops for the reasons above. This could affect your chances of purchasing the flat, especially if you don't have a lot of spare cash. 

One of the best things you can do to minimise this problem is hire a mortgage consultant. They can assess your situation and help you find a compatible mortgage lender. 

### What mortgages are available for flats above shops?

While it can be difficult to find a mortgage lender that will lend for this type of property, it's definitely not impossible. There are high street lenders and specialist lenders who offer mortgages if you know where to look. A reliable mortgage consultant can help you find the best one.

[We cover specialist mortgages in much more detail here. 
](https://www.getagent.co.uk/blog/buying/how-to-get-the-best-mortgage-rate "How to get the best mortgage rate")

Remember, it's unlikely you'll be able to purchase a property like this without a sizeable deposit. Most flats above commercial premises require a deposit of at least 20% of the property's value. 

**Should I get a full building survey?**

If you do buy a flat above a commercial premises, we recommend ordering a full building survey through a licensed conveyancer. A building survey will help identify any issues with the property, as well as the costs to fix them. 

Any repairs paid for by the freeholder are divided equally. As a leaseholder, you will have a responsibility to pay for repairs pertaining to the whole building. Annual costs are usually paid as service charges. The service charge should include the following:

- Internal parts maintenance
- Buildings insurance
- Overall structural integrity
- Water rates

Your conveyancer will determine the extent of what the service charge covers and provide a breakdown of these costs. As commercial premises have expensive service charges, you should decide  who pays what with the shop owner.

Please note that major works, such as roof works, are not covered solely by the freeholder. The leaseholder is expected to contribute, as roof works are deemed 'common parts' that benefit more than one person.

This type of property purchase demands a qualified conveyancing solicitor. You can learn more about choosing the right conveyancer with [our guide](https://www.getagent.co.uk/guide/conveyancing/choosing-the-right-conveyancer "Choosing the right conveyancer").

A local newsagent's shop front with a flat above.

Buying a flat above a shop: The pros and cons

We take a look at the merits of leasehold flats above commercial premises. Are they worth the hassle? What are the mortgage options for flats above shops?

With the Stamp Duty deadline over and done, the UK housing market has been left to recuperate following its blazing period through March to June. As many experts predicted, house sales have experienced a decline. House prices however, are continuing to soar thanks to a sustained demand from UK house buyers. This demand is particularly notable in England’s coastal addresses. An onslaught of buyers looking to relocate from cities has seen the average price of some seaside areas increase by over £100,000.

### UK house sales nosedived in July 

On the back-end of June’s Stamp Duty deadline, July saw UK house sales nosedive by almost two-thirds after home buyers rushed to complete the purchase of their new homes. While the end of the Stamp Duty deadline has tempered the number of house sales, their prices are still on the high. [June's UK House Price Index report](https://landregistry.data.gov.uk/app/ukhpi "UK House Price Index") observed an increase of 4.5% with an average price of £265,668.

Diminishing house sales and rising house prices have done nothing to reduce buyer demand, with Zoopla reporting an increase of 20.5% above the 2020 average. [The Guardian](https://www.theguardian.com/money/2021/aug/24/uk-house-sales-stamp-duty-holiday-deadline-tax-break "The Guardian - UK House Sales") has cited ‘the pandemic and growth of home working’ as key factors to this strong demand. 

With almost two years of lockdowns under their belts, it's no wonder that the average UK buyer is searching for greater space and comfort. Unfortunately, [The Telegraph’s Rachel Mortimer](https://www.telegraph.co.uk/property/buy/acute-shortage-homes-sale-last-2022/ "The Telegraph - Acute Shortage") has reported this ‘acute’ shortage of homes for sale could last well into 2022. With a depleted stock and a sustained demand, it’s unlikely that house prices will go down before the end of 2021.

### Home buyers flock to coastal addresses

Last month, [we revealed the top eight postcodes](https://www.thesun.co.uk/money/15723069/eight-postcodes-house-prices-rocketing/ "The Sun - Eight Postcodes") where house prices surged by almost £100,000, with sunny countryside counties like Cornwall and South Hampshire among the most popular. 

This heightened interest in coastal addresses suggests a shift in buyer attention from traditional city hotspots. In a [similar study of 120 coastal areas](https://www.rightmove.co.uk/press-centre/coastal-homes-sell-twenty-days-quicker-than-pre-pandemic-as-city-to-seaside-demand-doubles/ "Rightmove Coastal Homes Study"), Rightmove recorded an increase of 115% in city dwellers enquiring about homes for sale in coastal locations. They concluded that this interest could increase competition among buyers.

While coastal addresses are no doubt seeing a surge in popularity, Zoopla has curtailed any doubts that London might suffer as a result. In [their 23rd July press release](https://www.zoopla.co.uk/press/releases/zoopla-reveals-how-property-size-impacts-buyer-demand-for-new-homes/ "Zoopla - Property Size"), they reported that the demand for properties is ‘more concentrated’ in London, with average buyers searching for new homes within a five mile radius.


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