The government has confirmed that home buyers will not pay stamp duty on any home up to the value of £500,000.
This measure aims to reduce the economic impact of the coronavirus crisis. It aims to prevent young people, specifically, from being unable to afford housing.
Before the announcement, home buyers had to pay stamp duty for properties valued over £125,000 or £300,000 for first-time buyers. From now on, anyone in England and Northern Island will have the limit increased to £500,000.
There is no waiting period and the new changes will come into effect immediately. The new system will be in place until at least March 31st. After 7 weeks of decline due to the coronavirus crisis, home buying is expected to increase. There has been no discussion of any potential extension of the scheme yet.
Many people that were considering a house move or buying their first home before the coronavirus crisis are now understandably cautious. When the economy is uncertain people hesitate on major financial decisions like homebuying due to future uncertainties. Unfortunately, this delay will halt the housing market. We hope a tax break will motivate people to buy sooner rather than later.
The stamp duty holiday aims to assist young people affected by the economic impact of the coronavirus crisis.
Under the standard stamp duty rules, you would pay £15,000 stamp duty on a £500,000 house. New rules: No stamp duty for purchases under £500,000. Even on pricier properties, buyers save about £15,000 in tax.
Buyers can save £2,140 when purchasing a property based on the current average house price in the UK. This is a significant saving for those that are already struggling to find the money for a deposit. In London, it is estimated that 57 percent of buyers will pay no stamp duty at all.
Anybody purchasing a buy-to-let property will benefit from the changes as well. Investors who purchase a property through a limited company will not have to pay stamp duty on any property up to the value of £500,000 either. However, they will still need to pay the 3% surcharge. This means that investors spending less than £500,000 only need to pay 3% tax instead of the usual 5%. They will pay 8% on any properties between £500,001 and £925,000; 13% on properties between £925,001 and £1.5 million and 15% on anything over £1.5 million.
The housing industry is one of the most important sectors for job creation, so the government hopes that this stamp duty holiday will encourage more building as demand for homes rises. Encouraging people to move can free up more starter homes for those trying to get onto the property ladder.
The stamp duty holiday is in place until March 31st 2020 so if you are considering a move, now is the best time. Keep in mind that the average time for property completion is around 3 months, so you want to be sure to get your deal over the line before the holiday expires.
