In a bid to stimulate the economy and housing market after the UK lockdown due to coronavirus, the government has announced a stamp duty holiday for buyers until 31st March 2021. Buyers that are looking at properties under £500,000 are able to potentially save thousands of pounds on stamp duty and make moving house within the next year more affordable and an attractive option.
31st March might seem like a long time away, but when you consider that on average, it takes 6-7 months to complete a house purchase, it’s worth exploring your options now and seeing what’s out there.
What is Stamp Duty?
If you’ve never bought a property before or the last time you did was a long time ago then let’s refresh your memory about what stamp duty is. It’s essentially a tax you need to pay when you buy a property that comes in a lump-sum format. The amount that you need to pay depends on the value of the property that you’re buying and if it’s a residential or commercial property.
For example, no stamp duty is paid on a property upto £100,000, but it’s £1500 for upto £200,000, £5000 for upto £300,000, £10,000 for upto £400,000 and £15,000 for upto £500,000.
Under the new guidance, zero stamp duty will be paid on a property upto £500,000!
What Does a Stamp Duty Holiday mean for me?
A stamp duty holiday means that if you’re buying a property for £500,000 or less then you’re guaranteed to save money. 90% of homes in the UK are purchased for less than £500,000 so the chances are that you’ll benefit from this scheme and 9 out of 10 buyers will have a tax holiday. It’s easy to find out if you’ll be eligible by using the HMRC calculator too.
Buyers can add this saved amount to their budget pot for changes they want to make to their new property, increase their budget and look at different properties, add to their savings or any of the other transactional costs that arise when you move to a new property. The thought behind this is that it can help to boost the UK economy, with local businesses benefitted from an uptake in business related to home improvements or spending on any other sector.
The scheme is already proving popular and something that’s interesting potential buyers, RightMove saw an immediate uptick and surge of online activity. Estate agents are seeing lots of viewings being booked, as people try to take advantage of the scheme before it ends on 31st March next year.
This will also be able to help people who had their move stalled by coronavirus and may have incurred unpredicted and unfair extra costs – the stamp duty holiday will help to recoup some of the lost funds.
If you’re in the process of buying already and close to exchanging contracts and completing the sale, the scheme applies for any completion from the 8th July 2020, so you’ll still benefit!
For more advice and info, get in touch with our team at Home EA today.