The government have been trying to get the property market back up on its feet for months now. They have been trying lots of different things to try and give home buyers a bit more confidence. The recent government announcement is bound to give people that push that they need.
During the briefing, the government announced that a stamp duty holiday would go into immediate effect. This holiday will run until 31st March 2021, so home buyers have a long time to be able to benefit from it.
Stamp duty tax is a common barrier that stops peoples home buying process and sometimes it can put them off purchases. The government have introduced this holiday hoping that it will give buyers more confidence as the housing market is a key part of the UK’s economy and it needs to resume as fast as it can.
The government says the temporary move will mean 9/10 people buying a home during the exemption period won’t need to pay any stamp duty at all.
Here’s how the stamp duty changes could affect you, depending on your mortgage situation:
If you are a First Time Buyer, this change won’t really affect you as First Time Buyers rarely pay stamp duty anyway as they are already exempt up to £300,000. This holiday applies to properties up to £500,000 though, so if you are a First Time Buyer buying at that maximum figure then you would save £10,000 in stamp duty.
This move will most be most beneficial to Home movers moving up or down the property ladder. If you are moving and your purchase completes before March 31st 2020 then you will not pay Stamp Duty at all as long as the purchase price is <£500,000. The government predicts that the average stamp duty bill will fall by £4,500, but for properties priced at £500,000 the saving will be £15,000.
The stamp duty surcharge still applies (this was brought in to curb the number of investors buying homes that traditionally would have been bought up by First Time Buyers), but you will still be better off than before.
Under the old system, if you bought an investment property for £250,000, you’d have paid 3% on the first £125,000 and 5% on the second £125,000, resulting in a stamp duty bill of £10,000. During the holiday you will only pay 3% stamp duty on the whole purchase price, meaning a bill of £7,500.
Malcolm was on BBC Radio on 09/07/2020 to talk about the stamp duty statement and what he thinks of it, here is what he had to say: