What is Stamp Duty, and What Does A ‘Holiday’ Mean For Buyers?
Wonderful news for those buying (and selling) their homes. A stamp duty holiday may be just what the industry needs to pick up again, and most importantly, it puts a lot of households in an excellent position to go ahead with their plans that have, until now, been put on hold by COVID-19.Take Your First Step Towards A New Home
What is stamp duty?
In England and Northern Ireland, stamp duty is payable when you buy a property or piece of land worth more than £125,000 (unless you’re a first-time buyer) or over £40,000 if it’s for a second home.
Pre-summer budget, what would that look like?
£0 – £125,000 would have a 0% stamp duty rate
£125,001 – £250,000 would have a 2% stamp duty rate
£250,001 – £925,000 would have a 5% stamp duty rate
£925,001 – £1,500,000 would have a 10% stamp duty rate
£1,500,001+ would have a 12% stamp duty rate
In reality what that means is that if you were buying a house for £300,000, you’d pay nothing on the first £125,000, 2% (or £2,500) on the next £125,000 and 5% (or £2,500) on the final £50,000. That would bring your total stamp duty on a £300,000 property to £5,000.
What does the holiday mean?
This announcement means that property up to £500,000 will fall within the 0% stamp duty threshold until 31st March 2021.
Although people have been able to move house during this period, government guidelines have made some areas of a move difficult, so this change is welcomed by many as an indicator that there is a further step in place to make packing up and moving possible.
The goal is that this will give the housing market the kick-start it needs to get going again and will provide some welcome relief to households who would otherwise face a tax hit in what is already an uncertain time financially.
The great news for people looking at their options going forward is that there is now very little reason to delay the process, with the housing market likely to stabilise in the short-term as a result of this announcement.
This coming after house prices saw a decline for four consecutive months, a first since 2010, is a boost to both buyer and seller who will be thrilled to hear this holiday is immediate.
On top of this boost, we also heard details of a “green home” improvement scheme that will allow households to access a grant worth up to 67% of the cost of approved improvements up to the value of £5000, great news for those looking at renovation projects or remortgaging for improvements.
What can you do next?
If you’re looking into buying a house and want to know how this stamp duty holiday will impact you, we can pair you up with a mortgage broker to discuss how things will look moving forward. Give us a call today or learn more about how it works here.
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