Rishi Sunak is expected to announce the move, which will temporarily raise the level at which people start paying stamp duty from £125,000 to £500,000, this coming Wednesday.
It is understood the stamp duty ‘holiday’ will last for just six months and come into effect immediately following on from the chancellors statement tomorrow, in an attempt to give the market and economy a shot in the arm following on from the 8 week hiatus under coronavirus lockdown.
Under current rules, someone buying a £500,000 property will pay £15,000 stamp duty, although different rules apply for first time buyers and overseas residents buying a property in Britain.
Stamp duty must be paid when people buy residential property over a certain price.
The current property value threshold at which stamp duty must start to be paid is £125,000.
But there are different rules for first time buyers if the property is worth less than £500,000.
The amount of stamp duty paid gradually increases based on the value of the property.
So no stamp duty is owed on the first £125,000 of a property’s value.
Stamp duty worth two per cent is paid on the next £125,000, then five per cent is owed on the next £675,000.
For more expensive properties, stamp duty at 10 per cent is charged on the following £575,000 and anything above a property value ceiling of £1.5 million is charged at 12 per cent.
So if someone bought a house at a price of £275,000 they would pay zero per cent on the first £125,000, two per cent on the next £125,000 (worth £2,500) and five per cent on the final £25,000 (worth £1,250), giving a final stamp duty bill of £3,750.
First time buyers can currently claim a discount so they do not have to pay any tax on property’s worth up to £300,000 and five per cent on the portion from £300,001 to £500,000.
How would a stamp duty holiday work?
The theory is that giving potential buyers an effective tax break (by cutting their stamp duty bill to zero), will encourage them to move home.
The ‘holiday’ aspect means there’s an impetus to act because it’s not a permanent change. So sellers will need to act fast to ensure they get their homes on the market, receive an offer and get them completed so as to qualify
A stamp duty holiday is not only about helping people achieve their goals in terms of housing. It’s also about how important the housing market is to the economy as a whole.
When you move into a new home, you need to organise your finances and utilities.
The act of moving includes other services too. You may want to re-decorate, buy additional furnishings or do something with the garden. All of this supports the retail sector.
This ‘network’ effect on the economy means that the government is keen to encourage housing mobility.
All in all, it will be fantastic news for all will further ignite the property market which is absolutely welcome news for us all here. If you would like to discuss this in more detail and how it could impact your own move, please don’t hesitate to contact us.
Last week really was an amazing week for all the team here, momentum and interest in the property market continues to increase by the week with buyers continuing to want more from their current homes. Fantastic that the top end of the market is moving in line with the rest of the market as well, 3 sales agreed for us last week were over £600,000 (40B Middleton Way at £850,000, Brickbarn Cottage at £750,000 and 13 Gore Tree Road at £650,000)
Interestingly, 3 of the 4 buyers last week were from out of the area and we are seeing a significant increase in buyer registrations from London and the M25 corridor. Long may this wave of activity continue.
If you are thinking of selling or know anyone that is, we’d really love to talk to you or them, we now have more availability to work with some new clients due to the high sales numbers being achieved so please do consider us.
With this surge in activity we are seeing currently and this already looking like July is going to be as equally busy, the necessity of ensuring your home stands out from the crowd has never been so important. So we thought we’d take this opportunity to showcase how we market all of our homes and share with you, the reason why we do it…and that’s to ensure we are able to give every home the best chance of achieving its true value.
Get an indication of what your property is worth for sale and rental
Use our online calculator to get an idea of how much you could borrow
Work out how much Stamp Duty you’ll need to pay on your new home
Check out the homes we have available for sale in Cambridgeshire