Stamp Duty Holiday
We were all waiting for the current budget with bated breath. Where the economy has shrunk by 25%, vastly more than that of the great depression, then big things need to happen to address this.
That’s why the temporary stamp duty holiday for qualifying residential properties purchased from 8 July 2020 until 31 March 2021 inclusive, can only be a very positive step towards buoying up one of the largest sectors of our economy. When building and conveyancing had to effectively stop in March, there were always going to be huge repercussions.
The heartening thing as lockdown has eased, has been just how eager the British public are to move. Those who had to stall their plans during COVID-19 are now understandably more anxious than ever to complete. There are also those who sadly COVID-19 has forced into moving through death, divorce and job losses. And on a lighter note there are those who have decided after being cooped up in their houses for three months and surfing rightmove, they just desperately fancy a change!
The budget announcement regarding stamp duty will have come as welcome news to the whole sector – builders, agents, lawyers, lenders but perhaps none more so than buyers and sellers – buyers who will be anxious to take advantage of this deal and sellers who will find it easier to sell.
If you purchase a residential property between 8 July 2020 to 31 March 2021, you only start to pay stamp duty on the amount that you pay for the property above £500,000. Interestingly, and something which will be of huge relief to the second home and landlord sector of the market, these rates will apply whether you are buying your first home or you have owned property before.
The below table shows the residential stamp duty rates payable for first time buyers and those individuals or companies purchasing additional residential properties:
| First-time | Additional property | |
| Up to £500,000 | Zero | 3% |
| The next £425,000 (the portion from £500,001 to £925,000) | 5% | 8% |
| The next £575,000 (the portion from £925,001 to £1.5 million) | 10% | 13% |
| The remaining amount (the portion above £1.5 million) | 12% | 15% |
An example would be a first time buyer, purchasing for £545,000. Instead of the old first time buyer discount of not having to pay stamp duty up to £300,000, now the buyer will pay 0% stamp duty up to £500,000 and then 5% on £45,000.
If a buyer already owns property, they also benefit from the tax cut, but would still need to pay the additional 3% surcharge. So a second home buyer purchasing, again for £545,000 would pay 3% up to and including £500,000 and then 8% on £45,000.
If buyers have exchanged contracts but not yet completed, they will benefit from the tax break, as long as they complete on or before 31 March 2021. For some buyers of new homes, this may mean they miss the deadline, depending on how long their property will take to be built. Buyers will not be eligible for a refund if they completed before 8th July.
In a time where house prices have seen a fall in value for concurrent months now, where some mortgage providers are capping their lending, and other COVID-19 factors are squeezing the housing market, almost immediately after the budget, conveyancers and agents all over the UK were reported to be seeing a rise in enquiries and interest.
Some critics have said there will be artificial boom, others say that some sellers will be tempted to inflate their prices now to offset the stamp duty holiday. There will always be potential by-products to any changes, but we are a nation of house-movers, and this is a significant overall boost, which nobody can argue will be much welcomed over the coming vital months.
If you are looking to sell or purchase a property, please get in touch with our experienced residential conveyancing team for a no obligation online quotation, by visiting our conveyancing quote page on our website: https://www.askewslegal.co/get-a-quote/ or alternatively give us a call on 024 76 231 000.
