News: How Will The Stamp Duty Holiday Impact the UK Property Market?
Rishi Sunak has just made the much-anticipated announcement today as part of his summer statement:
UK house buyers are to receive a stamp duty holiday on properties up to £500,000, which will last until March 31st 2021.
This change will take place with immediate effect.
What exactly is stamp duty?
Stamp duty (Stamp Duty Land Tax, or SDLT) is the lump sum tax payable by anyone buying a house for more than £125,000.
The rates ofr SDLT vary depending on the type/price of the house you are going to buy – so the more expensive the house you are buying, the higher amount of stamp duty you need to pay.
How will this impact the housing market?
The hope, Mr Sunak poses, is that this stamp duty holiday will give a jump-start to the engine of the housing market as the UK relaxes the Covid-19 lockdown. Ideally, this move will inject some much-needed movement back into the market.
The housing market has been paralysed for the last three months by government lockdown measures during what is usually the busiest time of year. The aim of this new government measure by taking away stamp duty on properties up to £500,000, buyers will be able to take advantage of this saving and get buying.
The chancellor has done this to give British buyers some confidence in returning to a market in such uncertain economic times – and it seems that experts agree that Sunak’s plan could very well work.
This paints an enthusiastic picture of the UK housing market over the next nine months before the scheme ends on March 31st 2021. This could very well prove to be the case; with both pent-up demand due to a market freeze during the first stage of lockdown, and this new potential to save thousands in prospective stamp duty costs, it appears now is a good time to buy.
Approximately 90% of property transactions in 2018-2019 fall into the bracket of transactions which would be affected by this cut. If we use this number as a tentative model for what we can expect going forwards, it looks like a large number of UK buyers could stand to save money.
How much could I save?
The amount you could save as a result of this measure depends on who you are.
For example, for first-time buyers it's not a big boost: assuming you’re buying a house under £300,000, you would be exempt from stamp duty anyway.
But for those buying a second house, or a first home which costs upwards of £300,000, then the savings you could make are quite substantial. Mr Sunak believes that this will save the UK house buyers an average of £4,500.
If you were upsizing to your dream which is valued at £400,000 then you would have paid £10,000 in stamp duty.
However, between 8th July 2020 and the 31st March 2021, you would pay a grand total of £0 stamp duty on this property, leaving you with an extra £10,000 to renovate your home or keep in the bank.
Are you looking to take advantage of this new measure?
Get in touch with our experienced broker team to see what we can do for you.
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