In his summer statement this week, the Chancellor announced a temporary holiday on stamp duty, designed to help potential buyers who have been financially impacted by the Coronavirus pandemic. The announcement means there are significant savings to be made on purchasing your next home, until 31st March 2021.
To help you in your search for the perfect home, we’ve broken down exactly what measures have been introduced, and what they mean for you.
What is stamp duty?
Stamp duty land tax is a lump sum payment those buying a property or piece of land over a certain price have to pay. The rate a buyer has to pay varies depending on the price and type of property, but generally you would expect to pay more stamp duty the higher the property is worth.
Up until now, all home-buyers in England and Northern Ireland had to pay stamp duty on properties over £125,000, except for first-time buyers who did not need to pay stamp duty unless the property they were purchasing cost over £300,000.
Stamp duty rates are different in Scotland and Wales.
What has changed?
The government has temporarily increased the stamp duty threshold to £500,000 for property sales in England and Northern Ireland, until 31 March 2021. That means any home-buyers purchasing a property under £500,000 between 8th July 2020 and 31st March 2021 will not pay any stamp duty.
Property purchases over £500,000 will also only be taxed on their value above that amount, saving buyers as much as £15,000 on properties of £500,000 or more. Taxes above the threshold will be charged at the previous rates. For example, if you were to buy an £850,000 property, you’d pay £17,500 stamp duty (5% of the £350,000 above the threshold).
The Chancellor predicts the average stamp duty bill will fall by £4,500, Chancellor Rishi Sunak, with nearly nine out of 10 people buying a main home this year paying no stamp duty at all.
What does this mean for first time buyers?
The threshold increase to £500,000 means potential home buyers are able to look on the lower end of the housing market, to avoid having to pay any stamp duty. If a first-time buyer purchases a property for £500,000, the new system could allow them to save £10,000 on stamp duty, compared to the previous rate.
Can I still benefit if I’ve already completed a purchase?
The holiday applies from 8 July, which means anyone completing a property purchase before that date will have to pay the full normal stamp duty. Stamp duty is payable upon completion, so if you’ve exchanged contracts and are currently waiting for completion you will be able to benefit from the change.
If you are interested in purchasing a new home, and would like to discuss what the stamp duty holiday could mean for you, get in touch with our sales team at our Gallions Point or City North developments:
Call 020 3538 3394