Stamp Duty holiday announced

Today chancellor Rishi Sunak unveiled a stamp duty holiday on homes worth half a million pounds or less.  From today until 31 March 2021, buyers will pay no Stamp Duty on the first £500,000 when they move home. Rishi Sunak said the move would benefit nine in ten homebuyers – saving £4,500 on the average purchase.

Mr Sunak said property transactions had fallen by 50 per cent in May – with the first fall in house prices for 8 years.
The solution, he announced was a “temporary cut until 31 March” raising the threshold for paying stamp duty from £125,000 to £500,000, to kick in immediately.

“Uncertainty abounds in the market – a market we need to be thriving,” Mr Sunak told MPs, adding: “We need people to feel confident.
Currently, stamp duty is not charged on the first £125,000 of a property's selling price, with a 2% rate up to £250,000 and 5% on the next £675,000.

With the changes to Stamp Duty announced Wednesday, the Chancellor has provided another welcome boost to the property market and reiterated exactly how important bricks and mortar is to the health of the economy and broader consumer sentiment.

Jon Grocott, principal mortgage adviser at Granite Mortgages, commented “It is great news that the stamp duty changes come into effect immediately and I’m sure it will be welcome news for many prospective buyers. It should go some way to offset the reduction in the number of mortgage products available at 90% LTV since the outbreak of the coronavirus pandemic, giving buyers a little more cash for a deposit”.

What is stamp duty?

Stamp duty is a tax paid by people buying properties, although it varies across the UK.
In England and Northern Ireland buyers pay Stamp Duty Land Tax.
In Scotland it is Land and Buildings Transaction Tax, while in Wales buyers pay Land Transaction Tax.
The announced changes to stamp duty will only apply to buyers in England and Northern Ireland.

Who pays stamp duty and how much?

In England and Northern Ireland stamp duty is paid on land or property sold for £125,000 or more.
However, first-time buyers pay no tax up to £300,000 and 5% on any portion between £300,000 and £500,000.
For people who have bought a home before, stamp duty rates are 2% on £125,001-£250,000, 5% on £250,001-£925,000, 10% on £925,001-£1.5m, and 12% on any value above £1.5m.
That means someone spending £248,000 - the average cost of a house - would currently pay £2,460 in stamp duty to move home.
Landlords pay an extra 3% of stamp duty when they purchase a buy-to-let property in England and Northern Ireland.

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