There was great news for house buyers this week (Wednesday, 8th July 2020) when the Chancellor announced a significant holiday on Stamp Duty Land Tax (SDLT) for the first £500,000 of all property sales in England and Northern Ireland.
The changes to SDLT are expected to boost the property market and help buyers who may have otherwise been struggling to buy a new home because of coronavirus. The stamp duty holiday has been implemented with immediate effect and will be in place until March 2021.
What is stamp duty and what has changed?
Stamp duty is a tax paid by people buying properties, although it varies slightly across the UK. The government has temporarily increased the stamp duty threshold to £500,000 for property sales in England and Northern Ireland until 31 March 2021.
This will considerably reduce costs for homebuyers and even people buying homes worth more than £500,000 will enjoy substantial financial benefits as more expensive properties will only be taxed on their value above that amount. See below for an example of how buyers could save £15,000 in stamp duty on their new Harvey Home due to the new tax rules.
The new stamp duty rules include the following guidelines:
- The stamp duty holiday and price band revision will apply for both first-time buyers and people who have previously owned a property.
- If the property being purchased costs more than £500,000, then the buyer will pay stamp duty based on the revised rate bands.
- If a buyer is purchasing a second home, they’ll still pay stamp duty on properties that cost more than £40,000 at the new revised rates – paying an extra 3%.
- The new tax applies to both freehold and leasehold properties.
- The new tax applies whether a buyer is buying outright or with a mortgage.
- The changes to stamp duty will only apply to buyers in England and Northern Ireland.
Chancellor Rishi Sunak has suggested that the average stamp duty bill in England and Northern Ireland will fall by £4,500, with nearly 90% of people buying a main home this year paying no stamp duty at all.
Commenting on the budget announcement, Sunak said: “Throughout this crisis I have never been the prisoner of ideology,” Sunak said. “For me, this has never just been a question of economics, but of values.
“We believe in the nobility of work. We believe in the inspiring power of opportunity. We believe in the British people’s fortitude and endurance.
“Our plan has a clear goal: to protect, support and create jobs. It will give businesses the confidence to retain and hire. To create jobs in every part of our country. To give young people a better start. To give people everywhere the opportunity of a fresh start.”
A Harvey Homes Stamp Duty Example
At Harvey Homes’ Swan Green development in Knutsford, we have a wide variety of different house types available that have all been designed with families in mind.
We are delighted to hear that property buyers in England and Northern Ireland are being given a helping hand by the government. There are significant savings available now for buyers who are interested in the homes at Swan Green.
If we take our house-style The Tabley for example, then buyers will save an impressive £15,000! This is because the purchase price of The Tabley is £855,000 and if the property is set to be your main home, then you won’t pay any stamp duty on the first £500,000. The next portion of the property’s price (£355,000) will be taxed at just 5%.
The Stamp Duty Land Tax (SDLT) you owe is calculated as follows:
- 0% on the first £500,000 = £0
- 5% on the final £355,000 = £17,750
- Total SDLT = £17,750 (instead of £32,750)
Make a move this summer
These significant savings show that that there has never been a better time for buyers to find their dream home.
Harvey Homes’ Swan Green site is a hidden gem in the heart of Cheshire, just 5 minutes from the hub of Knutsford town-centre and with a whole host of useful amenities on the doorstep.
The four and five-bedroom homes feature large living spaces, modern technology and thoughtful storage solutions.
The Chancellor’s announcement shows that it is now the time to make the most of 2020 and to make a hassle-free move this summer with Harvey Homes!