Six-month stamp duty holiday - The final piece to make your dream move possible

by Luke Betts

So with the world beginning to resemble a distanced, yet cleaner version of normality; the Chancellor Rishi Sunak announced in his ‘Summer Economic Update’ that there will be a stamp duty holiday effective between the dates of July 8th 2020 and March 31st 2021.

Simply put, the stamp duty thresholds have changed drastically – Pay nothing up to £500,000,

5% on the next £425,000 (up to £925,000),

10%
on the next £575,000 (up to £1.5M),

12% on anything above 1.5M.

If you haven’t heard of stamp duty before it’s basically property transaction tax, usually paid on any home purchase costing over £125,000. If you have then you may know how much of an opportunity this presents, albeit during a time of uncertainty.

Although as Albert Einstein once said: “In the middle of difficulty lies opportunity”.

Whilst Einstein was not a property expert - Tom Bill, head of UK Residential research at Knight Frank certainly is. He states: “A stamp duty holiday would provide welcome financial relief for millions of people, including first-time buyers.

However, Tom also shared his scepticism about a temporary plan: “The government understands that moving house has far-reaching benefits for the UK economy and this may form part of a wider re-think of property taxation that recognises this strategically important role.

The new measures are an obvious attempt to revitalise the property industry in the UK after the Coronavirus pandemic; and it genuinely has the potential to pay off on both sides of the bargain.   

According to statistics from Rightmove, this stamp duty holiday will now mean a massive 9 out of 10 people buying a main home up until the 31st March 2021 will pay ZERO stamp duty. With the average saving being £4,500.

Lockdown has seen people holding onto their money, with UK consumer spending dropping by over a third. It also saw the Bank of England slashing mortgage rates all the way down to an incredible 0.1%. Combined with the new stamp duty thresholds this may allow thousands to afford property out of their previous budgets, facilitating their dream home move.

A home costing £450,000 would previously have cost you £12,500 in stamp duty alone last month, now a home costing up to £500,000 will incur no charge.

This comes as a welcome bonus for people currently mid-move too - a couple interviewed by the BBC stated: “We’re in the middle of buying our £346,000 dream home and have agreed a completion date of 30th July. It means we’ll have some money to use when we move in. The house needs some work doing to it, so we can use it there.

On the flip side, these new measures have caused outrage with people who have completed house sales during lockdown and property professionals alike. There is already a petition signed by over 6,000 people to backdate the stamp duty holiday to include all sales completed during the pandemic.

Many feel this is deeply unfair on people who may have struggled to obtain and subsequently give that money away in a time such as this. A feeling shared by Sarah Ryan, head of conveyancing at Simpson Millar:

There is no denying that for some, in particular those individuals, couples and families who have managed to complete during lockdown, or in the immediate aftermath, this will come as a bitter blow.

We would urge the government to make the scheme retrospective so that those individuals can also benefit from the cost savings.
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