Published: 16/07/2020 By Richard BennettStamp Duty cut announced to strengthen housing market
As announced last week by the Chancellor Rishi Sunak, there will now be a temporary holiday on stamp duty, to start with immediate effect and to run until 31 March 2021.
Stamp duty land tax will now be exempt on the first £500,000 of all property sales in England and Northern Ireland in a bid to kick-start the economy as part of the government’s Coronavirus recovery plan.
This means that the threshold for 'no stamp duty' therefore rises from £125,000 to £500,000.
Up to £500,000 – Stamp Duty - £0
The next £425,000 (the portion from £500,001 to £925,000) Stamp Duty - 5%
The next £575,000 (the portion from £925,001 to £1.5 million) Stamp Duty - 10%
The remaining amount (the portion above £1.5 million) Stamp Duty - 12%
From 8 July 2020 to 31 March 2021 the special rules for buyers are replaced by the reduced rates set out above.
For buyers who are purchasing a second home or buy-to-let property, they will also benefit from the changes, although the 3% surcharge will still apply. Set out as below:
Up to £500,000 - Stamp Duty - 3%
The next £425,000 (the portion from £500,001 to £925,000) Stamp Duty - 8%
The next £575,000 (the portion from £925,001 to £1.5 million) Stamp Duty - 13%
The remaining amount (the portion above £1.5 million) Stamp Duty - 15%
The Chancellor claims that the average stamp duty bill will now fall by £4,500 but could save buyers up to £15,000 off the overall cost of transactions in more expensive areas (i.e. the previous SDLT cost to £500,000).
This is a welcome announcement which will no doubt give a boost to the industry and further strengthen the housing market.
With stock under £500,000 predominantly active with first time buyers, who are currently restricted on the amount they can borrow from the banks, with many of the loan to value products limited or removed, this could be instrumental in unlocking this sector of the market and keeping things moving upwards. This relief could release up to 3 per cent additional capital to put towards a sale putting buyers in a much better position than before.
We are therefore advising all potential buyers to get out and view your properties now. There is a chance that as a result of the holiday, prices may potentially go up so we would recommend securing properties now at today’s prices.
If you have a property that you have seen and are currently in negotiations with or are considering making an offer – do your utmost to secure it now before the competition kicks in.
This money saving will also mean a larger deposit, potentially resulting in a better mortgage deal. If your budget has changed or you’d like to see what position this now leaves you in, please do get in touch to speak with one of our advisors.
If you are a seller, we are advising to get your properties on the market now to take advantage of the expected spike in demand. We have already seen very strong demand and activity levels in recent weeks, with sale and offer levels even higher than we saw in a very buoyant Q1. This is only going to get stronger in coming weeks and we therefore suggest making the most of it now.
To find out more and to discuss what this means for you, please contact us on 01777 808777. We’re here to get you moving.