The Chancellor Rishi Sunak has announced on the 8th of July that the Stamp Duty threshold will temporarily raise from £125,000 to £500,000 until March 2021 in a bid to boost the property market. 

Stamp Duty must be paid on either buying a property or land worth more than £125,000 in England and Northern Ireland, with a tiered system which is as follows:

These are the rates:

  • Up to £125,000: 0%
  • On the portion from £125,001 to £250,000: 2%
  • On the portion from £250,001 to £925,000: 5%
  • On the portion from £925,000 to £1.5m: 10%
  • Above £1.5m: 12%

However, there is a specific exemption for first-time buyers who don’t have to pay any stamp duty on the first £300,000, providing the property doesn’t cost more than £500,000.

For anyone buying an additional property worth £40,000 or more, such as a second home or a property to let, an extra 3% of stamp duty is to be paid on top of the current stamp duty rates.

With the new stamp duty holiday in place, stamp duty is applied on properties above £500,000, and this will apply for first-time buyers, and people moving up or down the property ladder. 

New holiday rates:

  • Up to £500,000: 0%
  • On the portion from £500,001 to £925,000: 5%
  • On the portion from £925,001 to £1.5m: 10%
  • Above £1.5m: 12%

The 3% stamp duty surcharge will still apply on the first £500,00 on top of these holiday rates, for anyone buying an additional home.

These new measures were introduced to boost the property market and promote buyers who were keen to buy prior the lockdown restrictions.

Since April, there have been calls for a stamp duty holiday to help revive the housing market as the lockdown eases. The stamp duty has not only benefited the property market, it has also benefited the economy as a whole. 

When people buy a new home, they will need to organise their finances, utilities, purchase new furniture, equip the kitchen, re-decorate, and perhaps make improvements to the garden. In effect, this will promote other businesses which are linked to the housing market, supporting the overall economy. 

This new announcement has been welcomed by buyers, estate agents and developers who saw the housing market come to a halt by the coronavirus crises. 

 

If you are looking to purchase a property and want to know more about the Stamp Duty changes, call us on 0116 275 8888!

This is subject to further government policy changes.