This week the Chancellor announced homebuyers won’t need to pay stamp duty on the first £500,000 of a property’s purchase price. It is a measure that will stay in place until April 2021 in a bid to keep the housing market moving.
At the moment, a buyer would start paying stamp duty on everything over £125,000 (or £300,000 for first-time buyers if their property costs less than £500,000) but the Chancellor feels that increasing the threshold for any purchase completed between the 8th July 2020 and 31st March 2021 will benefit 9 out of every 10 homebuyers.
The Chancellor has said that on average buyers would save £4,500 per transaction. However, if we use the fictional purchase of a £400,000 as an example, before the cuts you would have paid a total of £10,000 in stamp duty across the two main bands (£125,001-£250,000 and £250,001 and £400,000). Under the Chancellor’s temporary scheme you will pay nothing.
And, although stamp duty will still be payable on properties costing more than £500,000, the new threshold will also provide significant savings for those purchasing houses at the top end of the market.
For example, if you are looking to buy a house for £600,000, you would now only pay £5,000 in stamp duty rather than the £20,000 you would have paid before.
Better still, as it isn’t triggered until completion you will still benefit from the cuts even if you exchanged before Wednesday 8th July but haven’t actually completed.
We do have to stress that the cuts in stamp duty are only currently available in England things work a little differently in Scotland and Wales.
The immediate reaction in both countries has been to ask their governments to consider how to structure and implement similar reliefs and we will be watching to see how that progresses.
If you are planning to move and would like to discuss stamp duty or anything else relating to the sale of your current house or the purchase of your new home, please email [email protected] or call us on 0208 515 6600.