Stamp duty scrapped on homes under 500k

In an effort to get the housing market going during the coronavirus pandemic, the Chancellor of the Exchequer Rishi Sunak announced a temporary change to stamp duty, the tax you pay when purchasing a home. From now until the 31 March 2021, home buyers in England and Northern Ireland won't have to pay stamp duty when buying homes costing up to £500,000. Usually, the threshold where you start paying stamp duty is £125,000 (£300,000 for first-time buyers).

The chancellor suggested the average stamp duty bill will fall by £4,500. According to Treasury figures, nine out of ten people purchasing a property this year will not have to pay a single penny of stamp duty.

Buyers purchasing homes over £500,000 will also benefit as they will only be taxed on the value above that amount. This could result in savings of as much as £15,000.

The stamp duty changes in England and Northern Ireland are as follows:

•    Property price up to £500,000 - stamp duty 0%
•    Property price from £500,001 to £925,000 - stamp duty 5%
•    Property price £925,001 to £1.5 million - stamp duty 10%
•    Property price above £1.5 million - stamp duty 12%

For the purchase of investment properties and second homes, buyers will still have to pay the 3% stamp duty surcharge with the amount increasing according to the property's value. But this will be on the new temporary rates. So here too savings can be made. And remember, second home owners and buy-to-let landlords will also benefit from the increased £500,000 threshold.

The move is not only aimed at helping buyers who have suffered financial consequences because of the virus. It's also clearly intended to revitalise the housing market, which has been hit hard by the global pandemic. According to NatWest, house prices have fallen four months in a row.

Since the chancellor made the announcement in his summer statement, estate agents have reported a surge in interest from property buyers and sellers. Online real estate portal Rightmove says interest has doubled for homes between £400,000 and £500,000 in parts of London and the south.

Reigniting the Economy

There could be even more good news. The housing market is usually a good barometer of the broader economy, and if it is perceived positively, it could encourage spending in other areas, not least from new buyers purchasing furniture and hiring decorators.

August 2020