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Yesterday the Chancellor announced a temporary holiday on stamp duty, which means if you purchase a residential property, you only start to pay SDLT on the amount that you pay for the property above £500,000. These rates apply whether you are buying your first home or have owned property before. This Stamp Duty ‘holiday’ came into effect from 8 July 2020 until 31st March 2021 and could represent a saving of almost £15,000 for a property bought for £500,000.
What is Stamp Duty Land Tax?
Stamp duty land tax (SDLT) is a lump sum payment which you have to pay if you are buying a property or piece of land over a certain price. The rate a buyer has to pay varies depending on the price and type of property - usually you would expect to pay more stamp duty if the property is worth more.
What has changed and how does it effect buying a property?
Prior to yesterday's announcement, all house-buyers in England and Northern Ireland had to pay stamp duty on properties over £125,000, or if you were a first-time home buyer you did not need to pay stamp duty unless the property you were buying was more than £300,000.
The temporary change means that properties over £500,000 will be subject to 5% stamp duty rate, then 5% on the portion between £500,001 to £925,000, 10% on £925,001-£1.5m, and 12% on any value above £1.5m
How will it effect those buying an additional property
The higher rates of SDLT for the purchase of residential properties will remain in place. However, the rate of SDLT will be 3% on the first £500,000 (rather than having 3% on the first £125,000), then 8% on the next £425,000 and 13% on the next £575,000, and 15% on the remaining amount (the portion above £1.5 million).
Simon Cooper, Partner at Stags says: “This unexpected change will undoubtedly have a positive effect on the property market. Within hours of the announcement we have seen a spike in the number of enquiries and traffic to the Stags website. If you are thinking of moving home (or indeed buying another) now must be a great time to do so."
For further details on the Stamp Duty changes please visit the Government website: gov.uk/stampduty