Wow, what a day and what fantastic news for home movers with the announcement and introduction of the Stamp Duty holiday. Its obviously a big change with massively positive implications but it naturally also raises some questions, most of which i hope we were able to answer to the many people we spoke to this afternoon and this evening. Its been a long day and the time is now 22:16pm as i write this to you so i hope i’m still coherent and making sense but i thought it might be useful to put some detail around the announcement which i hope covers all the questions that were fielded to us. If there is something i haven’t covered or you want to chat about your own personal options, please do call or email us we are here to help and advise as much as we can.
The government has today (8th July) unveiled a new stamp duty holiday that will run until 31st March next year
So what does this mean for you?
Previously, you would have paid stamp duty on homes sold for at least £125,000, or if you were a first-time buyer, on properties sold for more than £300,000.
The threshold has now been raised to £500,000.
This means that 9 out of 10 people buying a main home between now and the end of March will pay no stamp duty at all, and the average stamp duty bill will fall by £4,500.
The temporary stamp duty holiday kicked in on 8th July and it’s hoped these changes will make it easier for many of you to buy a home in the coming months.
The chancellor’s announcement on stamp duty only applies to properties in England and Northern Ireland.
Stamp duty is a lump-sum tax that anyone buying a property or land costing more than a certain amount must pay. The rate at which you’ll pay the tax varies depending on the price of the property and the type (i.e. residential or commercial).
Here are some stats to help put the chancellor’s comments into context which Rightmove kindly provided:
There are over 510,000 properties that are under £500,000 on Rightmove in total, making up 81% of all properties for sale in England
Over 291,000 properties under £500,000 are currently available for sale on Rightmove, making up 78% of all properties available for sale in England – this means they have not yet found a buyer
People enquiring about properties under £500,000 on Rightmove makes up 84% of all buyer enquiries we get in England
If you buy a home between now and 31st March 2021, you only start to pay stamp duty on the amount that you pay for the property above £500,000.
You can use the table below to work out the stamp duty due:
| Property or lease premium or transfer value | SDLT rate |
|---|---|
| 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% |
So for example, if you are purchasing a home for £800,000, your Stamp duty cost previously would have been £30,000. With the introduction of the Holiday, this is reduced by 50% because there is no duty from 0 to £500,000 and so you pay 5% between £500,001 to £800,000.
So excellent news and sizeable savings for those buying towards the top end of the market as well.
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:
| Property or lease premium or transfer value | SDLT rate |
|---|---|
| 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% |
This might not make sense, so lets break it downn.
Stamp Duty is paid at different rates, depending on the purchase price. For example, someone subject to Stamp Duty buying a property for £245,000 would pay no tax on the value of the property up to £125,000 and 2% tax on the property value between £125,001 and £245,000. In this case, total liability for Stamp Duty would be £2,400 giving an effective tax rate of 1%.
Those subject to the additional rates of stamp duty rates will pay an extra 3% on top of the relevant standard rate band. In this example that would represent an extra £7,350, meaning the total stamp duty would be £9,750 giving an effective tax rate of 4%. Under the Stamp Holiday however the total would be £7,350 as the £2,400 is within the 0 to 500k banding.
Purchase price of propertyRate of Stamp DutyAdditional Property Rate*
| Purchase price of property | Rate of Stamp Duty | Additional Property Rate* |
|---|---|---|
| £0 – £125,000 | 0% | 3% |
| £125,001 – £250,000 | 2% | 5% |
| £250,001 – £925,000 | 5% | 8% |
| £925,001 – £1,500,000 | 10% | 13% |
| Over £1.5 million | 12% | 15% |
And Lastly. Appreciate this is a fairly wordy email but if you are still with me, i thought id share some of the quotes from a Rightmove press release following on from the announcement.
“This move will help to keep the nation and wider economy moving because keeping the current momentum going will help prevent destabilising falls in property prices as unemployment grows, and enable a quicker economic recovery.
“Lockdown prevented 175,000 would be sellers from coming to market so we hope this Stamp Duty holiday will provide the spur for those missing movers to come to market. They will find there’s currently record demand for their properties from prospective buyers, with Rightmove enquiries to agents now double what they were before lockdown.
“Home-movers will be grateful that the changes come into effect straight away so they don’t have to delay their plans, and what we could see now is people rushing to get a price agreed before some sellers put their prices up in the hope people will be able to pay more because of the tax savings.”
Hope this has been a useful round up, as i mentioned at the beginning, this is a hugely positive step which will save home movers thousands of pounds. It also a tax and can be confusing and a bit daunting so we are here if you would like to talk any of it through so please dont heistate to make contact.
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