News

As part of the Government’s measures to help the country and the economy as we continue to deal with the effects of the coronavirus pandemic, the Chancellor announced last month a temporary reduction in Stamp Duty Land Tax (SDLT) on residential properties.

The relief applies to residential property purchases from 1 July 2020 to 31 March 2021 inclusive.  This temporary reduction represents good news to many thousands of people and the UK property market generally.  The SDLT threshold has been raised from £125,000 to £500,000 which will result in an average saving of approximately £4,500 and a possible total saving of £15,000 per transaction. 

What is SDLT?

SDLT, which is more commonly known as stamp duty, is a tax payable by an individual or a business in a transaction involving land.  Essentially, a percentage of the purchase is paid to Inland Revenue based on the value of the property.  The greater the value of the property, the greater the level of stamp duty due. 

How will this help first-time buyers?

First-time buyers were already entitled to stamp duty relief with no tax payable up to £300,000 and 5% due on any portion between £300,000 and £500,000.  The help now available may well prove to be an incentive to benefit first-time buyers, although times still remain difficult for first-time buyers as we have seen 95% of loan-to-value mortgages disappear from the market, meaning that they now need at least a 10% deposit.

What about second homes and investment properties? 

Second homes and investment properties will also benefit but will still have to pay a 3% extra duty due on the entire price.  They cannot, therefore, take advantage of the 0% stamp duty threshold rise, but investors can still make savings from this relief.  This means that only 3% of stamp duty is payable on properties up to £500,000.

What about companies? 

Companies, as well as individuals buying residential property worth less than £500,000, will also benefit from the recent changes, although they will still be subject to the ‘additional homes’ 3% surcharge, as will companies that buy a residential property of any value above £500,000 where they meet the relief conditions from the corporate 15% stamp duty. 

What happens after 31 March 2021? 

At the time of writing, the position is that from 1 April 2021, the stamp duty holiday will end, and stamp duty regulations will return to what they were before the temporary changes being announced.  We are, therefore likely to see a rush of activity before 31 March 2021, with those people who have access to finance making the most of the opportunity that the temporary stamp duty holiday is able to provide. 

The temporary relief on stamp duty is welcoming news as a stimulus to the housing market following the impact of the Covid-19 outbreak.  With uncertainty still ahead across many sectors, the stamp duty measures announced by the Chancellor represent a positive step and a boost for the property market which stands to benefit not only first-time buyers but also home movers. 

If you want to buy or sell your home, please do not hesitate to contact one of our Property Team - Clive Rossin, Selina Turner, or Linda Whittington on 01636 703333.  We are happy to provide a quote and answer any queries you may have in relation to stamp duty or other associated residential property issues. Or look at how we can support you by clicking here - Buying and Selling a Home.