Stamp Duty Cut – What Will the Changes Mean for Buyers?
On 8th July the Chancellor of the Exchequer announced a temporary cut to Stamp Duty Land Tax (SDLT) as part of his Summer Economic Statement. The move, which had been widely anticipated as a way to kick-start the housing market following the COVID-19 lockdown, brings an effective holiday on stamp duty on the first £500,000 of all property sales in England and Northern Ireland until next March.
It has been estimated that the cut will save the average house buyer £4,500, bringing 9 out of 10 buyers outside of the Stamp Duty threshold altogether.
The Stamp Duty cut was announced with immediate effect and will last until 31st March 2021 as long as the property will be used as your main residence and you do not already own a property. The effective rates over and above purchase prices of £500,000 will remain the same; at 5% up to £925,000, then 10% in the next portion of the purchase price to to £1.5 million and 12% on anything above that.
Stamp Duty is often a significant cost when it comes to buying a house that can put movers off; especially where second or third time movers who are looking to buy bigger and more expensive properties are concerned. This cut could go some way to encouraging people in these positions to move sooner rather than later so they can benefit from the tax reduction.
In turn, there are a range of other property-related businesses that stand to directly benefit from more house-movers, including estate agents, finance and insurance providers, surveyors and moving companies. In addition, once people move into their new homes, the knock on effect of home improvements will further boost sales in household, furniture and garden retailers, alongside a potential increase in demand for property-improvement related businesses and self-employed individuals.
The cut will be welcomed by those in the midst of the house buying process, some of whom could now stand to save several thousands of pounds.
However, clearly the cut will come as bad news to buyers that have recently completed on their purchases, with no opportunity to reclaim stamp duty that’s been already paid out.
House buyers that had previously been considering a move may now be tempted to bring forward their plans to aim to complete their purchase prior to the end of the temporary reduction.
For more information on how the cut to SDLT may affect you, please get in touch with us. Our award-winning residential conveyancing team are happy to advise you regardless of where you are up to with your property sale or purchase.
Contact Claire Egerton to discuss your circumstances or to obtain a competitive quote for our conveyanycing services.
Claire Egerton is Head of Residential Property at O’Donnell Solicitors.
For any further advice, please contact Claire on 01457 761320 or email firstname.lastname@example.org.