In his Summer Statement, Chancellor of the Exchequer, Rishi Sunak, announced the first ever stamp duty holiday by temporarily increasing the threshold for this tax from £125,000 to £500,000.
He said: “The average stamp duty bill will fall by £4,500 and nearly nine out of 10 people buying a main home this year, will pay no stamp duty at all.”
The aim is to is help reignite the property market after the COVID-19 crisis and the stamp duty holiday will run from July 8th until Mach 2021 in England and Northern Ireland.
It goes without saying that these new changes are great news – especially if you are thinking of selling, buying or investing in a buy-to-let. But they do come with a few T&Cs. So, we’ve pulled together everything you need to know about the new stamp duty holiday:
What is Stamp Duty?
Stamp duty is a tax paid by people buying properties. The amount you pay depends on where you are in the UK and the price of the property.
Interesting fact – it was first introduced in England in 1694 as a transaction tax to raise money for war against France. At the time, it was raised on goods including hats, newspapers and patent medicines.
What does the new stamp duty rules mean?
In laymen’s terms, this new stamp duty ‘holiday’ means significant savings for homebuyers who complete on their purchase between 8th July 2020 and 31st March 2021.
|Property price||Stamp Duty on first £500,000||Stamp duty on remaining balance|
|Up to £500,000||Nil|
|£500, 001 to £925,000||Nil||5%|
|£925,001 to £1.5m||Nil||10%|
What about second homes or investment properties?
There’s also some good news if you are thinking about investing in an additional residential property like a second home or buy to let. These are subject to an extra 3% in stamp duty (thanks to the 2016 second home surcharge) but this is now on top of the revised rates.
|Second home property price||Stamp duty|
|Up to £40,000||NIL|
|£40,001 t0 £500,000||3%|
|£500, 001 to £925,000||8%|
|£925,001 to £1.5m||13%|
Is stamp duty payable on all dwellings?
You’ll pleased to know that stamp duty does not apply to caravans, mobile homes or houseboats.
Jo Jingree from Mortgage Confidence said: “I’m speaking to lots of people who’ve been considering their next move during the time in lockdown. From first time buyers keen to get a place of their own to people determined to move up the ladder to a house with a garden or some extra space for home working. And this new initiative could help make that dream a reality.
“But the numbers have to add up of course. We offer a free initial consultation for people looking for some early guidance on what might be possible and that’s really easy to organise now that we’re all so proficient at video calling!”
So, if you’re thinking about re-mortgaging, buying your first home or investing in a second property don’t hesitate to get in touch. Our mortgage adviser Jo has more than 20 years’ experience and is here to make getting your mortgage as easy as can be. You can email or call Jo on 07742 228302.