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08 Jul 2020
In today’s summer economic update, Rishi Sunak announced that in England, to try and stimulate demand in the housing market after lockdown, he would raise the threshold at which homebuyers start paying stamp duty from £125,000 to £500,000 until the end of March 2021.
Currently in England, stamp duty is not charged on the first £125,000 of the property selling price but 2 per cent of the property price is payable on all properties up to £250,000, rising to 5 per cent on the next £675,000.
Rightmove has calculated that this reform could mean savings of at least £12,000 for many buyers in England.
I really do hope that this announcement will help to kick-start the property market after three months of inactivity. The market is moving well at the moment but when furlough ends and with an anticipated recession looming, it is likely that it will need a boost. By removing one of the significant barriers that may put off many buyers from deciding to move home in times of such economic uncertainty, this should give them the confidence and stability they need to move forward with their purchase. It may also allow people to put down a bigger deposit, thereby reducing the amount they will have to borrow on their mortgage.
We are very pleased that the reform will come into effect immediately as we had been concerned that anticipation about any cuts being brought in later in the year would have brought the housing market to a standstill in the short term.
It does, however, risk causing confusion as the stamp duty rules are different here in Wales. We just want to make it clear that this new stamp duty holiday will not apply to buyers in Wales, unless the Welsh Government decides to follow the Chancellor’s lead.
In Wales, stamp duty was replaced by Land Transaction Tax in 2018. Buyers currently pay 3.5% LTT on any homes between £180,000 and £250,000, 5% on anything above £250,000, 7.5% on anything above £400,000, 10% on anything above £750,000 and 12% on anything over £1.5 million.
We obviously welcome any measures to get the housing market moving again after months of frustrating, long drawn-out inactivity for many thousands of homeowners. Stamp duty is a considerable additional expense on top of the cost of your house purchase so getting some relief from those costs during these difficult times will clearly be welcomed by many.
However, as our client base spans both England and Wales, we are keen to know for sure how it will play out in both countries. Hopefully it will have the desired effect and get more people buying and selling their homes, as this would give a much-needed boost to the economy as we start to emerge from lockdown.
If you are looking to buy or sell your property and are unsure about how the new rules affect you, give one of the friendly, experienced Residential Property team at Harding Evans a call on 01633 235145 or 02922676819 or get a quick conveyancing quote by visiting our Residential Property page.
Harding Evans is a trading name of Harding Evans LLP, a limited liability partnership, registered in England & Wales (registered number: OC311802), authorised and regulated by the Solicitors Regulation Authority (SRA number: 419663).