Partner Luke McMath, in our Residential Property team, explains the Stamp Duty 'holiday' and changes announced by the Chancellor, Rishi Sunak and looks at the potential savings for property buyers.
In his ‘mini budget’ on 8 July 2020, Chancellor Rishi Sunak confirmed the immediate introduction of a Stamp Duty ‘holiday’ for those purchasing residential properties before 31 March 2021.
The current situation
Prior to today’s announcement, In England Stamp Duty Land Tax is normally paid on bought land or property valued at £125,000 or more.
Stamp Duty rates are normally charged on a ‘sliced’ basis, meaning that the rate increases for higher value properties as follows and that multiple rates may be applicable for different proportions of a property’s value:
|
Portion of a property’s value |
SDLT rate that applies to this portion |
|
£125,001-£250,000 |
2% |
|
£250,001-£925,000 |
5% |
|
£925,001-£1.5 million |
10% |
|
-£1.5 million + |
12% |
Today’s announcement means that until 31 March 2021 anyone purchasing a main property valued at under £500,000 (including first time buyers, who have been exempt on paying SDLT up to £300,000 and have paid 5% on any portion between £300,000 and £500,000) will pay no SDLT. Buyers of higher value properties will pay a reduced amount of SDLT, saving £15,000.
How much can a buyer save?
The table below sets out the potential SDLT savings that buyers completing between 8 July 2020 and 31 March 2021 stand to make as a result of the newly introduced Stamp Duty holiday.
|
Property purchase price |
Normal Stamp Duty (SDLT) charge |
Stamp Duty (SDLT) charge between 8 July 2020 and 31 March 2021 |
|
Under £125,000 |
- |
- |
|
£250,000 |
£2,500.00 |
- |
|
£350,000 |
£7,500 |
- |
|
£450,000 |
£12,500 |
- |
|
£500,000 |
£15,000 |
- |
|
£600,000 |
£20,000 |
£5,000 |
|
£750,000 |
£27,500 |
£12,500 |
|
£1 million |
£43,750 |
£28,750 |
|
£2 million |
£153,750 |
£138,750 |
The impact
A Stamp Duty holiday will no doubt help to stimulate a property market significantly affected by the COVID-19 pandemic and an extended period of lockdown, as well as the resulting ongoing economic uncertainty.
However, we are concerned that the step may lead many people to bring forward moves that may have happened later in 2021 and beyond, creating a sharp spike in demand and activity but leaving the market quieter and perhaps below normal levels in the second half of next year.
Our highly experienced Residential Property team is here to help if you are considering buying, selling or investing in property. On the day of the announcement, Luke McMath appeared on BBC Radio Berkshire to discuss the changes.
You may also find our recent blog articles, 'The Housing Market: Predictions for 2020 - 2021', 'Firm's Survey Shows Estate Agents Confident That Region’s Housing Market Will Recover' and 'Law Firm’s Findings Suggest That Property Developers Remain Positive' of interest.
For further information or legal advice, please contact law@blandy.co.uk or call 0118 951 6800.
