Stamp Duty Changes To Get Market Moving
Last week in his mini-budget, the Chancellor announced that in order to create and support jobs in the housebuilding and property sectors, he said that people needed to feel “confident to buy, sell, renovate, move and improve.” He then delivered some welcome news to home buyers, by moving the Stamp Duty threshold to much higher than it had been.
Previously, the price of any property from £125,000 would incur a Stamp Duty fee (or £300,000 for first-time buyers)
As part of his economic statement, Chancellor Rishi Sunak announced that from the 8th of July 2020, this threshold will be raised Stamp Duty will only apply to houses that are priced £500,000 upwards. This move to is a temporary one, however, and will last until 31st March 2020 in England and Northern Ireland.
By doing this, it is believed that it will help 9 out of 10 people get on the property ladder, or move up the property ladder (or even downsize for that matter) and they will have to pay no Stamp Duty at all.
What is Stamp Duty anyway? And how much does it usually cost?
Anyone who buys a property or land that costs more than a set figure has to pay a lump-sum land tax, otherwise known as, you’ve guessed it, Stamp Duty.
The lump-sum value varies, depending on the price and type of the property or land you’re purchasing. Before the Chancellor’s announcement, if you were to buy in England or Northern Ireland, you would have to pay the following in Stamp Duty –
Nothing on properties purchased for up to £125,000
2% on the portion of a property between £125,001 and £250,000
5% on the portion between £250,001 and £925,000
10% on the portion between £925,001 and £1,500,000
12% on the portion costing more than £1,500,001
First-time buyers buying a property for up to £500,000 already don’t pay stamp duty on the first £300,000 and pay 5% on any portion between £300,001 and £500,000 (if your property’s worth more, the normal rules apply – as above).
But right now, until the 31st March 2021, no one will pay Stamp Duty when buying their main home worth up to the value of £500,000.
For properties costing more than £500,000, the Stamp Duty bands above £500,000 stay the same. However, you will still make a saving of £15,000 on the first £500,000. For example, if you bought a £600,000 property you would have to pay £5,000 Stamp Duty (this is 5% of the £100,000 above the threshold) – before the Chancellors changes were announced, you would have had to pay £20,000.
As of now and up to the end of March next year, savings any home buyer can expect depends on how much the property costs. Basically, the more expensive the property, the more can be saved (up to a maximum of £500,000).
For example, if you are not a first-time buyer and are buying a property for £400,000, you would have to pay £10,000 Stamp Duty (made up of £2,500 on the portion between £125,001 and £250,000, and £7,500 on the portion between £250,001 and £400,000). But thanks to this temporary measure, no stamp duty is to be paid at all – making a huge £10,000 saving.
What if I’m buying a second home? Does the raised Stamp Duty threshold still apply?
If you’re buying a property that’s not your main residence and is worth more than £40,000, the 3% levy still applies (but it still works out less than it was due to the temporary raised threshold).
What about Scotland and Wales?
Taxes are paid differently in Scotland and Wales; land and buildings transaction tax are paid in Scotland, and land transaction tax is paid in Wales. Neither country is included in the Chancellor’s announcement.
Have you exchanged but not yet completed?
The payment for Stamp Duty is required when you complete the purchase of the property. So, if you’ve exchanged before the 8th July 2020 but haven’t yet completed, you’ll be pleased to hear that you will also benefit from the raised thresholds.
If you were thinking about moving this year but unsure due to the uncertain financial times, this may now be the catalyst for you to make the move.
And we will be on hand to help you with that; from packing to transporting and delivering into your new home. We look forward to moving with you!