Stamp Duty Holiday Extension
WHAT EXACTLY DID THE CHANCELLOR ANNOUNCE?
Rishi Sunak has declared the stamp duty holiday will be extended until the end of June 2021. That means homebuyers in England and Northern Ireland will pay no stamp duty on properties worth up to £500,000.
The extension will save an additional 300,000 home buyers up to £15,000.
An extension to the deadline was widely anticipated. Surprisingly, the Chancellor also announced that stamp duty will be tapered after the holiday ends. With the aim to ease the transition back to normal, the nil rate band will be £250,000 until the end of September. It will return to the usual threshold of £125,000 on 1st October.
The news will hopefully come as a relief to those buyers and sellers who have been desperately trying to get their sale completed in time to meet the previous deadline of 31st March.
What is the stamp duty holiday?
Chancellor Rishi Sunak introduced the stamp duty holiday in July 2020. It came into effect on July 8 and will now run until September 30, 2021. The aim was to give a boost to a housing market that had ground to a halt by offering a stamp duty break on the first £500,000 of the purchase price of a property in England or Northern Ireland.
Stamp duty is simply the money we pay to the taxman when we buy property or land in the UK worth over a certain value. The previous threshold for stamp duty land tax (SDLT) for residential properties in England and Northern Ireland was £125,000 (for first-time buyers it was £300,000).
The tax break means that house buyers could save up to £15,000 when buying a new home.
STAMP DUTY HOLIDAY RATES TABLE
|Property Purchase Price||Stamp Duty Rate|
|£0 to £500,000||0%|
|£501,000 to £925,000||5%|
|£925,000 to £1.5 million||10%|
The stamp duty bands will remain otherwise unchanged. So, for the duration of the holiday, there will be no initial stamp duty band. Instead, stamp duty will jump straight to 5% for properties costing from £500,000 to £925,000 and then to 10% for properties up to £1.5 million.
What other help for homeowners is there?
The chancellor also announced a new “mortgage guarantee” in the Budget.
Starting in April, the government will provide a guarantee to lenders who offer mortgages to people with a deposit of just 5% on homes with a value of up to £600,000.
The government says the scheme will allow more people to become homeowners.
Lloyds, NatWest, Santander, Barclays and HSBC will be offering 95% mortgages from April, with other lenders including Virgin Money expected to launch products later.
Before the announcement, stamp duty in England and Northern Ireland was paid on property sold for £125,000 or more. First-time buyers did not pay any stamp duty up to £300,000.
Landlords and second-home buyers are also eligible for the tax cut but will still have to pay the additional 3% of stamp duty they were charged under the previous rules.
At Versus Law we support the extension which will allow more of our customers to benefit from the savings however due to the increase in sales and purchases taking place as a result of the stamp duty holiday now is the time to get in touch and start your journey to purchasing your new home. Click here to use our handy conveyancing calculator for a free no obligation quote and remember the earlier you start the process the better your chances of completing your purchase on time.