Stamp duty holidays confirmed.
The Chancellor, Rushi Sunak, confirmed on Wednesday, the 8th of July, that new temporary rules will be placed to boost the property market. He announced that the Stamp Duty Land Tax will be suspended until 31st of March 2021 for properties up to £500,000 in value, with immediate effect. The tax holidays will also apply to landlords looking to expand their property portfolio or incorporate as letting business.
The changes are a welcome from the industry and buy-to-let investors and those looking to move their home. Residential home buyers, both first home buyers and those moving home, will not pay any tax on the purchased property up to the £500k limit, while the second home buyers and property investors will only pay the 3% surcharge. This means that on the property of £500,000, an investor will pay £15,000 instead of £30,000.
Those individual buy-to-let landlords who will move their business into a limited company business will benefit from the tax relief on mortgage interest since a transfer would normally incur the stamp duty charge. They were previously more reluctant to do so due to the cost but now there will be a clear advantage to do so.
Overall, the stamp duty holiday will benefit an estimated nine out of ten property purchasers and would save an average of £4,500. The benefits will be more visible in London and south-east and south-west areas where the property prices are higher and the potential savings could reach £15,000. This is a huge benefit, as the money can be put towards the deposit and buyers could achieve better Loan-To-Value ratio and therefore better interest rates.
Check out the Stamp Duty Land Tax Calculator to check if and when will you pay the tax.