The Government has granted an immediate nine month (lasting until 31st March 2021), stamp duty land tax holiday to homebuyers in England and Northern Ireland. This means that those buying homes that are valued up to £500,000 will no longer have to pay any stamp duty on the purchase. As both Wales and Scotland have their own property taxes, only England and Northern Ireland will be able to benefit from this stamp duty holiday.
Due to the impact that COVID-19 has had on the housing market, Chancellor Rishi Sunak has announced a measure that could potentially save the average homebuyer over £2,000, in the hopes this will help kick start the property market, after it was predicted the market would take a severe hit this year.
The average selling price for a home in England is about £247,000, meaning that those looking to move house could potentially save £2,440 each. For people buying a property valued at £500,000 or more then the incentive as saved them a whopping £15,000 in stamp duty. We have seen a massive influx in home movers motivated by this saving alone! Good move Rishi
Who will benefit from the stamp duty holiday?
Already, first time buyers do not pay a stamp duty tax if they are buying a property for £300,000 or less, so for many first time buyers looking to get on the property ladder, they will not financial benefit from the new measure. However, they might benefit as homeowners may be more willing to sell as they could save money on their next purchase.
In theory it is buyers of properties who benefit from stamp duty holidays, since it is buyers who pay the tax. However, from the stamp duty holiday that happened in 2008, after the financial crisis, it suggests that homeowners will find themselves with extra money. The reason for this being that as they will know that their buyer won't be paying the stamp duty tax, they might maintain their higher asking price.
Overall, the stamp duty savings will likely end up being quite balanced, with sellers managing to pocket half of the difference but is ultimately down to the negotiations.
This announcement was also relatively positive for Buy to Let Landlords looking to invest. If you are looking at buying a second home, a holiday home or a buy-to-let, there is an additional stamp duty charge, starting at 3% and increases due to the price of a property, reaching up to 15%. However you would still benefit from no stamp duty up to £500,000 on standard rates. So if you are buying a Buy to Let for £500,000 again this is an instant saving of £15,000.
Having a stamp duty holiday in place will likely lead to a rush of purchases and give the economy the boost it needs.
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