We know, this year has been a little bit of a downer for everyone. However, amidst all the doom and gloom, there is a little chink of sunshine on the horizon for homebuyers.
In his Summer statement, packed with proposals to kickstart the economy, Chancellor Rishi Sunak announced a stamp duty holiday until March 2021 – potentially saving homebuyers thousands.
You may be wondering what this means for you? Well, if you’re looking to move in the next nine months, quite a lot.
What is stamp duty?
Stamp Duty is a tax that paid when you buy a property or a piece of land, and is calculated as a proportion of the purchase price. Prior to the Chancellor’s announcement, there were two different points at which stamp duty was payable, depending on whether you were a first-time buyer or a mover.
For movers, stamp duty was paid on any property costing more than £125,000, at a rate of two per cent, up to a purchase price of £250.000. For first-time buyers, there was no stamp duty to pay unless a property cost more than £300,000. If your first home cost more than £500,000, you paid the same as a mover but if it cost less than that, you only paid tax on the portion that fell between £300,000 and £500,000.
What has changed?
From July 8th 2020 to March 31st 2021, the starting threshold for payment of stamp duty at any rate will be increased from £125,000 to £500,000 – meaning that if you buy a property for less than this, you’ll pay none at all. Nada. Zilch which will save buyers thousands of pounds.
The starting rate above £500,000 will be five per cent – as it was previously – and will apply to the part of the sale up to £925,000.
Who will benefit?
Put simply, 90 per cent of buyers will benefit to some degree, as nearly nine out of 10 transactions will no longer be subject to stamp duty.
The idea behind the cut is to stimulate the housing market – always at risk in any recession – although there are signs that coronavirus, conversely, may already have had a more positive impact. As more and more people turn to working from home, there are signs that this may in itself improve the market, as buyers look to move away from the hustle and bustle of cities and buy themselves a slice of tranquility.
So, if lockdown made you realise you need your own space – or more of it – now is a pretty good time to make a move, so why not get in touch and see what we can do for you?