The Chancellor has made an announcement in order to boost the housing market. Rinesh Sunak has temporarily raised the tax threshold for Stamp Duty on all house purchases up to £500,000 with immediate effect. Finally some good news for those who are wanting to get started on the property ladder!
The changes have come about to help those buyers who are struggling due to the coronavirus crisis. A decrease in buyer confidence can lead to rising house prices. This can also affect the sellers market negatively as there was a reported downfall of 50% in housing market transactions in May.
Below is a brief outline of the Stamp Duty holiday and how this can impact you if you are buying and selling.
What are the details?
The Stamp Duty Holiday is the temporary removal of the Stamp Duty tax for house purchases up to £500,000 until March 2021. Any houses purchased over £500,000 will be taxed on their value above that amount.
Properties between £500,001 and £925,000 will be taxed at 5%, properties between £925,000 and £1.5 million will be taxed 10%. The remaining amount over £1.5 million will be taxed at 12%.
What savings will you receive?
Houses priced at £200,000 will benefit from the saving of £1,500, these savings increase up until houses priced at £500,000 where they will receive a generous £15,000 worth of savings.
While properties over the amount of £500,000 will still pay this tax, you can still experience this £15,000 saving off what they would originally pay on Stamp Duty Tax.
Who cannot receive these savings?
If you have completed a buying transaction for a house before the 8th of July will unfortunately not be eligible for the reduction in tax.
This reduction in the Stamp Duty Tax is only available to England and Northern Ireland. Scotland and Wales have their own relegated Land tax and are not included in this ‘holiday’.
What will be the impact of this?
If you are a buyer, this is great news! You may save up to £15,000 on your first house purchase. Chancellor Rinesh Sunek has suggested that Nine out of 10 people who are buying a main home will not pay any Stamp Duty tax.
These savings should increase buyer confidence which in turn should have a boost to the housing market and give a ‘knock-on’ effect to the wider economy.
For those who are selling this increase of buyer confidence will lead to an increase in housing sales, perfect for those who have been relying on the sale of their property but have struggled since the coronavirus crisis.