New Stamp Duty holiday could stimulate new housing market demand
Today the Chancellor of the Exchequer, Rishi Sunak MP, announced a Stamp Duty holiday that is hoped will incentivize buyers and offer some much-needed support to the property market.
Stamp Duty Land Tax (SDLT) is a tax payable on land purchases in England and Northern Ireland, with Scotland and Wales operating under a different system.
Prior to today’s announcement residential properties in England attracted no SDLT if they were purchased for less than £125,000. After that:
- You would have paid 2% of the property value between £125,001 and £250,000
- 5% between £250,001 and up to £925,000
- Then 10% between £925,001 and £1.5million, and
- 12% on anything over £1.5million
During Covid-19 and the subsequent lockdown, the property market took a nosedive. The value of property began to fall significantly in some areas and according to figures from HMRC, sales of homes in April fell to their lowest levels since records began in 2005 with less than half the number of transactions completed during the month when compared with the previous year.
The Chancellor acknowledged that the property market was key to rebuilding and strengthening the economy, but that the uncertainty in the market was casting a shadow. In order to bring more confidence in the market that will in turn drive that growth, Mr Sunak hopes these latest measures will achieve just that.
The changes will see the current SDLT exemption threshold raised upwards from £125,000 to £500,000 for transactions that are completed or substantially performed between 8th July 2020 and 31st March 2021.
This will see the average household SDLT bill fall by £4,500 with nearly 9 out of 10 people buying a main home during this period paying no SDLT at all. For a property being bought for £500,000 or more the saving will be as much as £15,000.
For purchases liable to the Higher Rates for Additional Dwellings, the 3% band is increased from £125,000 to £500,000.
The temporary rates do not apply where the transaction was completed before 8th July 2020.
For full details on today’s announcement https://www.gov.uk/guidance/stamp-duty-land-tax-temporary-reduced-rates
We will be keeping an eye on the detail from today’s statement, but in the meantime if you would like some advice relating to your own house purchase, contact the property team at Downs Solicitors to see how we can help.