Chancellor unveils Stamp Duty holiday
July 8, 2020
Chancellor Rishi Sunak has confirmed that the Stamp Duty threshold will be increased to £500,000 immediately until March 31 next year. Sunak confirmed rumours of the Stamp Duty holiday during his summer economic update this afternoon. He said the Government will temporarily increase the nil-rate band of residential Stamp Duty in England and Northern Ireland from £125,000 to £500,000. This will apply from today (July 8th) until March 31 2021.
The Treasury said nearly nine out of ten people getting on or moving up the property ladder will pay no Stamp Duty at all. The aim is to boost the housing market and the wider economy to help the UK recover from the consequences of the coronavirus pandemic. It comes after the property market was effectively closed between the end of March and mid-May.
Agents and portals have said there has been more demand since the market reopened but it is so far unknown if this will transfer into sales. Rightmove said there are more than 510,000 properties with asking prices under £500,000 on the portal, making up 81% of all residential stock for sale in England. The property website said 291,000 properties under £500,000 are currently available for sale, making up 78% of all properties listed in England. It said people enquiring about properties under £500,000 on Rightmove makes up 84% of all buyer enquiries in England.
Mark Peck, head of residential at Cheffins estate agency, said this could provide the incentive many unsure buyers and sellers need. He said: “Whilst the market has already been significantly busy post-lockdown, cutting Stamp Duty on purchases up to £500,000 really will be the catalyst get the industry flying. The most likely impact of this measure will be a flood of buyers coming into the market who previously had sat on their hands due to political and economic uncertainty, and this flurry of activity will bring with it price rises as demand outweighs supply. He suggested it would also boost those with a low deposit as they could now increase it with the Stamp Duty savings.
How much will buyers save?
How much a buyer in England or Northern Ireland could save under the temporary measure will depend on how much the property costs – as a general rule, the more expensive the property, the more you'll save (up to the maximum of £500,000). For example, if you buy a property for £400,000 in England and you're not a first-time buyer, you would usually pay £10,000 (made up of £2,500 on the portion between £125,001 and £250,000, and £7,500 on the portion between £250,001 and £400,000). But for now, you'd pay no stamp duty on the property at all – saving you £10,000. The Chancellor has said the average saving will be £4,500.
What if I've exchanged but not completed?
The requirement to pay stamp duty is triggered when you complete the purchase of the property. So if you've exchanged prior to 8 July but not completed, you'll benefit from the increased thresholds.
Residential Rates on purchases from 8 July 2020 to 31 March 2021
If you purchase and complete on a residential property between 8 July 2020 to 31 March 2021, you only start to pay SDLT on the amount that you pay for the property above £500,000. These rates apply whether you are buying your first home or have owned property before.
You can use the table below to work out the SDLT due:
Up to £500,000 Zero
The next £425,000 (the portion from £500,001 to £925,000) 5%
The next £575,000 (the portion from £925,001 to £1.5 million) 10%
The remaining amount (the portion above £1.5 million) 12%
From 8 July 2020 to 31 March 2021 the special rules for first time buyers are replaced by the reduced rates set out above.
Higher rates for additional properties
The 3% higher rate for purchases of additional dwellings applies on top of revised standard rates above for the period 8 July 2020 to 31 March 2021.
The following rates apply:
Up to £500,000 3%
The next £425,000 (the portion from £500,001 to £925,000) 8%
The next £575,000 (the portion from £925,001 to £1.5 million) 13%
The remaining amount (the portion above £1.5 million) 15%
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