In July 2020, as a result of the coronavirus pandemic, Rishi Sunak put measures into place to get the economy up and running again, and one of these measures was the stamp duty holiday in England and Northern Ireland.
The new threshold exempts buyers from paying stamp duty on homes worth less than £500,000. While second-home buyers would still have to pay 3% stamp duty, this applies to all residential properties. Originally, the scheme was due to run until March 31st 2021 but has since been extended to 30th June 2021. From that point until 30th September, there is to be a staggered return, with stamp duty being free on properties under £250,000. If you are a first-time homeowner, you will pay no stamp duty on homes under £300,000 and a reduced rate on homes between £300,000 - £500,000.
Unless you are a first-time buyer, you will have to pay stamp duty on residential properties costing more than £125,000 as of 1st October 2021.
As you can imagine, the stamp duty holiday has been welcomed by homebuyers who are now acting quickly on their house purchases to make the most of the saving.
How the stamp duty holiday helps homebuyers and landlords
Homeownership is critical to the UK economy, upward mobility, and the ambitions of many people who are currently finding it difficult to purchase a house. Given recent events that have brought the economy to an almost grinding halt, it is essential that the UK economy gets moving again, so giving first-time buyers a leg up to get on the property ladder is one way to kick start it.
However, it is not the first time a stamp duty holiday has been implemented. A stamp duty holiday helped double the number of home sales during the 1992 recession. A 12-month stamp duty holiday was also one of the steps put in place to help the property sector recover during the 2008 financial crisis.
Zoopla, the property portal, has found that around 750,000 buyers will have benefitted from the stamp duty holiday by the time it ends.
It has especially benefitted those buying properties in the North East, where two-thirds of properties currently for sale fall under the £250,000 threshold. Buyers in these areas will therefore have plenty of opportunities to buy a property without having to pay any stamp duty whatsoever before the end of September.
The stamp duty holiday also means that not only are buyers saving a significant amount of money for the time being, but that house sales are going through quicker than ever.
Buyers are obviously keen to compete before the end of the scheme, and sellers are aware that the property market is likely to see a drop in demand when the stamp duty holiday scheme comes to a close, so are eagerly pushing sales through and accepting offers more readily to get it done.
The stamp duty holiday makes no distinction between those buying their first home or those who are well up the ladder, making it great news for anyone looking to buy a house under £500,000 at the moment.
The stamp duty holiday also means that those looking to buy their starter home will benefit from more of them being available.
The stamp duty holiday also benefits landlords and property investors
Anyone buying a second home, whether as a buy to let or an investment or holiday home still has to pay a 3% stamp duty surcharge, but they still make savings thanks to the stamp duty holiday. The lower threshold will have bought those thinking about dabbling in the investor market to go ahead and make the purchases while they can make savings.
All in all, the stamp duty holiday has helped homebuyers, whether they're taking their first step towards homeownership or they're well and truly up the ladder, while also benefitting landlords and potential property investors. It has also given the UK economy a boost at a time when it is very much needed, which is a win all around!
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