Posted Wednesday, August 19, 2020
A recent announcement from Chancellor Rishi Sunak has people across the country reconsidering their property habits. A stamp duty land tax (SDLT) "holiday" for property buyers in England and Northern Ireland (NI) is in place until 31st March 2021.
What is stamp duty, you ask?
Homeowners pay this when purchasing "property or land over a certain price in England and NI". It's paid when:
The threshold price for SDLT has traditionally been £125,000 for residential properties and £150,000 for non-residential land and properties, however, a new threshold of £500,000 has been instigated during this time of the pandemic.
The threshold was previously staggered according to property type and the following price ranges:
0% > £125
5% £250001 – 925000
12% > £1500001
For first time buyers, the rules used to be:
5% £300,0001 - £500,000
With the new holiday in place, nobody pays SDLT on any purchase below the £500,000 mark. Bands above this, however, remain the same.
What does this mean?
Prior to this, buyers purchasing a property worth £400,000 would have paid £10,000 in stamp duty, but today would pay nothing. The Chancellor says average savings are projected at £4,500 per new purchase. Stats show that 9/10 people will skip on paying their stamp tax this year if downsizing or first-time buyers (The Treasury). This movement has been part of a government incentive scheme, which also offers 50% discounts on eating out in August, and vouchers of up to £5,000 for homeowners to improve their energy efficiency.
Whilst this change was made in efforts to boost the property market, not everyone agrees. Skeptics think that this holiday should be applied to homes still in development, and "off-plan" to increase the wiggle-room for construction of new homes that are in desperate demand.
If you’re a Developer looking for advice or even finance solutions, we recommend Sentient SDLT contact Matthew Winder on 07838242999.
You can calculate your updated SDLT with this tool provided by the Money Advice Service: