What does the stamp duty holiday mean for you?

Last month the Chancellor, Rishi Sunak, announced a temporary stamp duty holiday for home buyers and property investors in a bid to boost the property market following the impacts of the coronavirus crisis.

The Chancellor has suggested that these changes will cause the average stamp duty bill to fall by £4,500. And, nearly nine out of 10 people buying a main home this year will not pay any stamp duty at all. This means some home buyers could be saving up to £15,000 when buying a property!

So, if you’re thinking of moving or are in the process of buying a property and want to know exactly how this will affect you, here’s what you need to know.

What is stamp duty?

Stamp duty is a tax you pay on completion of buying a property. The amount of stamp duty paid depends on the cost of the property, whether you already own a property, and where you are in the UK. Currently the stamp duty holiday will only apply to buyers in England and Northern Ireland.

What has changed?

Since 8^th July, anyone completing on a main residence (as opposed to a second home or additional property) costing up to £500,000 will not pay any stamp duty until 31^st March 2021.

For houses costing more than £500,000, stamp duty will only be charged on their value above that amount.

How will this affect you?

First time buyers

For first time buyers the stamp duty holiday could open up more opportunity for buying in more expensive areas. Previously first time buyers would pay stamp duty on properties costing £300,000 or more but now they will only need to pay stamp duty on properties costing more than £500,000.

Existing home owners

If you are purchasing a new property, which will be your main home, you will not pay any stamp duty if it costs £500,000 or less.

Property purchases above £500,001

If you are purchasing a more expensive property, you will be taxed 5% on properties costing above £500,001 and up to £925,000. At that point, a higher rate of tax kicks in, which will see you pay 10% tax on the amount between £925,001 to £1.5million. Any amount over £1.5 million will be taxed at 12%.

Landlords and second home buyers

For both landlords and those who are buying a second home, you are still eligible for the reduction in stamp duty. However, you will still have to pay the 3% surcharge, as you did under the previous rules. The stamp duty holiday still means buying a second home or a buy to let property will be cheaper than it was previously.

Unfortunately, if you completed before 8^th July 2020, the government currently has no plans to backdate this reduction.

To find out exactly how much stamp duty you’ll have to pay, you can use the government’s stamp duty land tax calculator here.

How can we help you?

We understand that purchasing a house can feel daunting and overwhelming. For most of us, purchasing a home is likely to be one of the largest financial commitments we’ll make. So, getting it right is essential.

Our expert team of mortgage advisers are available to help you make the right decision and guide you throughout the process. Whether you are a first-time buyer, looking to remortgage, a second homeowner, a landlord or looking to invest in a buy to let property, we can help.

To find out more about how we can help you, call 0330 332 7866 or email advise-me@fosterdenovo.com. We can arrange an initial meeting with one of our qualified advisers at no cost to you.

Calls are charged at your standard landline rate.

Your home or property may be repossessed if you do not keep up repayments on your mortgage. There will be a fee for mortgage advice which will depend on the amount you are looking to borrow, your requirements and circumstances. The Financial Conduct Authority does not regulate some aspects of buy to let mortgages.