Until 31st March next year, any individual or company buying a residential property will not pay stamp duty land tax (SDLT) on the first £500,000 of a property’s purchase price. Before this temporary measure came into force on 8th July, SDLT was payable on properties of over £125,000 on a sliding scale with the exception of first-time buyers who have always been exempt from the tax up to the first £300,000.
The stamp duty land tax holiday is welcome news for everybody considering a house move at the present time.
How will the new rule affect residential property buyers?
The government says that nine out of ten people who move house will pay no SDLT during this ‘holiday’ period. Those purchasing properties worth £500,000 or more will also benefit as they will not pay tax on the first £500,000 of the purchase price.
Some first-time buyers might also benefit by deciding to buy a property up to £500,000 as they can now do so without having to pay SDLT after the first £300,000.
Are there any restrictions to the stamp duty land tax ‘holiday’?
The SDLT holiday only applies to those buying residential property in England and Northern Ireland. Scotland and Wales have different systems – building transaction tax in Scotland and land tax in Wales.
People buying second properties or buy-to-let properties will also profit from the
SDLT holiday, although they will still have to pay the 3% surcharge on the first £500,000 of the purchase price as normal.
The SDLT holiday does not apply to commercial property.
How much will buyers save on a house move?
Before the SDLT holiday came into force residential property buyers had to pay 2% on the portion of a property between £125,001 and £250,000, and 5% between £250,001 and £925,000. First-time buyers were exempt on transactions of up to £300,000 and paid 5% between £300,000 and £500,000.
Under the SDLT holiday most residential property buyers will save thousands if not tens of thousands of pounds. For example, somebody buying a property for £248,000 will save £2,460. Somebody purchasing a property for £500,000 will save £15,000. The higher the purchase price of a property the greater the saving.
Why has the stamp duty land tax holiday been introduced?
SDLT has long been blamed for deterring people from moving house because it can be a considerable expense. The government is hoping that this initiative will ensure the property market remains healthy.
A healthy property market is a key feature of a thriving economy. Buying a newly built house can create jobs for developers and builders and purchasing any residential property provides work for professionals such as conveyancers, surveyors and estate agents as well as supporting local shops and services.
Stimulating the housing market will help the country to get back on its feet and recover from the economic fallout of the pandemic.
Has the stamp duty holiday impacted the housing market so far?
When the housing market re-opened in May residential property sales figures began to creep back towards normal as thousands of people joined the market. In May and June Rightmove recorded their busiest days with a 40% increase in people emailing estate agents compared to March, before the lockdown was announced. Conveyancers also received an increase in new instructions from people wanting to make up for lost time.
The residential property market has been more resilient than it was feared. In June buyers paid 97.7% of a property asking price on average compared to 96.6% for sales completed in February, and the average asking price for a property on sale was up by 1.9% on sale prices just prior to lockdown.
Within half an hour of the government’s SDLT holiday announcement Rightmove said that traffic to their website increased by 22%. On the day of the announcement the number of people contacting estate agents was up by 93% and requests for home valuations was up by 89% compared to the same day in 2019. Enquiries about purchasing newly-built residential properties was also up by 21% on the previous daily record.
Rightmove’s property expert Miles Shipside said that there is now a record demand for properties from prospective buyers. He believes the stamp duty land tax holiday will incentivize more sellers to join the market. Those who have experienced a change in their family or working life during lockdown might be propelled into making a move.
I am planning to move house – what is the next step?
A residential property solicitor can advise you on your house move as soon as you begin searching for your new home.
Successful property transactions have always depended upon the efficiency and speed of the conveyancing process. The longer and trickier the conveyancing, the more likely it is that somebody’s circumstances will change in the meantime. Where there is a chain there has always been the possibility that somebody might become ill, lose their job or find their mortgage offer has expired and this is particularly true at the moment.
Conveyancing paperwork such as proof of identity and address can be completed straightaway. The quicker your conveyancer has the completed paperwork in their hand the sooner they can carry out local authority searches. They will also be able to answer your questions and advise you throughout the house move process.
Why choose Insight Law?
We understand that moving house can be challenging at the best of times and we do not underestimate the concerns that our clients may have in today’s circumstances.
Since the property market re-opened we have continued to adapt to the changing situation by prioritizing the safety of our staff and clients while maintaining high standards.
If you would like to talk about what the stamp duty land tax holiday could mean for you or you have questions about a house move contact our team who will be pleased to help you (02920 093600).
Posted by Insight Law on
20 July 2020