The announcement of a “stamp duty holiday” in the chancellor’s summer statement will be welcome news to homebuyers across England.
How SDLT is changing?
Prior to the announcement on 8 July, Stamp Duty Land Tax (SDLT) was payable on purchases above £125,000.00 (although first-time buyers paid no SDLT on the first £300,000 on properties worth up to £500,000.00) but the holiday will see this threshold increase from £125,000.00 to £500,000.00 across the board. This will provide considerable help to purchasers across England with homebuyers now set to save up to £15,000.00 when purchasing a property.
Unlike the first-time buyer relief implemented in 2017 (which saw first-time purchasers of a property priced up to £500,000.00 paying 0% on the first £300,000.00), there is no limit on the purchase price of a property in order for the new relief to apply. This will be welcome news for purchasers who may be looking to move up the ladder and purchase a more expensive property: the first £500,000.00 will be taxed at 0%, any portion between £500,001.00 and £925,000.00 will be taxed at 5%, between £925,000.00 and £1.5million at 10% and any amount over £1.5million at 12%.
How investment buyers of second homes and buy-to-let properties are affected
For investment buyers of second homes or buy-to-let properties, the 3% surcharge introduced in 2016 will still apply but they will also benefit from the reduction introduced by the holiday. For example, a purchaser of a second property worth £600,000 would have paid stamp duty of £38,000.00 prior to the announcement. As of 8 July, £23,000.00 of SDLT would now be payable for the same property.
Who does the Stamp Duty (SDLT) change apply to?
The holiday applies to purchases completing from 8 July 2020 until 31 March 2021. This means that buyers who have already exchanged and are due to complete after 8 July will be able to benefit from the holiday and will have extra funds to spend on their new homes. It is also expected that those who may have been considering a move will bring those plans forward to take advantage of the savings to be made.
August 2020 Stamp Duty Calculator
You can calculate the amount of stamp duty that you can expect to pay during the holiday using the government’s online stamp duty calculator
If you are looking to purchase a property or have any queries on the changes please do contact a member of our residential conveyancing team who will be more than happy to help.
Although correct at the time of publication, the contents of this newsletter/blog are intended for general information purposes only and shall not be deemed to be, or constitute, legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article. Please contact us for the latest legal position.