On the 8th July 2020 the Chancellor announced a temporary stamp duty holiday for homebuyers in England and Northern Ireland.
This has now been extended, with a tapered ending.
Budget 2021 – update
A petition to extend the stamp duty holiday reached over 148,000 signatures – and therefore was debated in parliament on 1st February. As of 3rd March, it was announced that the holiday will be extended until the end of June for properties up to £500,000. This extension will be tapered until the 30th September, applying to properties up to £250,000. There are hopes this will avoid another ‘cliff edge’.
This was due to pressure that the housing market and hundreds of thousands of deals would collapse without an extension.
What is stamp duty and when is it paid?
Stamp duty land tax (SDLT) is a tax a homebuyer is required to pay on a property or land in England and Northern Ireland.
From July 8th 2020 the threshold for STDL is changing temporarily.
What has changed?
The threshold when you are required to pay stamp duty on a residential property has been raised from £125,000 to £500,000.
The temporary rate reductions are as follows:
|Property Purchase Price||Stamp duty rate (% of purchase price)|
|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%|
These new rates will apply whether you are buying your first home or have owner a property before.
How long will the stamp duty holiday last?
The stamp duty rate adjustments became effective on 8th July 2020. It will end on the 30th June for properties up to £500,000 and 30th September for properties up to £250,000.
The government has since updated its stamp duty calculator to reflect these temporary changes.
Who does this help?
The Chancellor said 9 out of 10 homebuyers would not pay any stamp duty during this period.
I’ve always thought stamp duty was an unnecessarily cruel tax on first-time buyers. So this is great news for those who would have been facing this expense.
Those buying more expensive properties will also only be taxed on the value above that amount. This could save those homebuyers as much as £15,000, if they are buying a property at or above £500,000.
The stamp duty holiday also benefits buyers of second homes and buy-to-let properties. They will now just pay the 3% up to £500,000.
What about house prices?
As things stand today – prices are holding up. As I have said in previous blogs until the furlough and mortgage holiday schemes conclude it is not possible to assess the realities. People’s finances, employment situations, and general sentiment will all be impacted.
All of these are the issues that will affect house prices over the next couple of years.
Predications and guesswork will continue but no one has a crystal ball.
Move home or stay put?
Life goes on, we all need to live somewhere, we still have a housing shortage and therefore greater demand than supply.
If you are in a position to buy and save a few pounds, then great but only spend what you can realistically afford and at a price you believe to be worth it to you at that time.
Getting yourself prepared and organised to take advantage of a stamp duty holiday is more relevant than ever. So, whether you’re buying a house or selling one be sure to download one of my free home mover toolkits to guide through each vital step.
However, if you’re forced by circumstance to put your moving plans on hold then this is the right thing to do.
There may be turbulent times ahead but there will be light at the end of the tunnel.
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