Clare Andrews looks at the cut in Stamp Duty Land Tax (SDLT) and what it means for the housing market.
Following a couple of months of uncertainty in the property market as a result of Covid-19, the Government has now provided some good news for home buyers, with changes to Stamp Duty Land Tax taking effect immediately instead of waiting until Autumn as was originally feared.
What are the changes to Stamp Duty Land Tax?
The announced ‘Stamp Duty Holiday’ will see reduced rates of SDLT apply to residential properties purchased between 8th July 2020 and 31st March 2021. In this period, purchasers will only start to pay SDLT on amounts above £500,000 where as previously it was £125,000. By extending this threshold, purchasers of properties for less than £500,000 will pay no SDLT on their transaction at all.
The reduced rates will also benefit investors or people looking to buy a second home, as whilst they will still be charged the additional 3% surcharge the threshold change will generate a saving.
What are the benefits of a Stamp Duty Holiday?
Since restrictions were lifted in June, we have seen a positive change in the market and it is hoped that the SDLT holiday will create a further boost. Undoubtedly, the financial benefits of the scheme will prove a real incentive allowing buyers to search in earnest and make offers with confidence. The fact that the changes impact on all buyers is good news as it will encourage homeowners to take that next step and free up larger family homes, which are so in demand. The changes should also be attractive to property investors, or those looking to acquire a country retreat, which has been a priority for many of our clients since lockdown has been eased. A vibrant property market can only be a good thing for the wider economy. The short-term benefits of the changes are clear, whether 8 months is long enough to have any real benefit for the long term is yet to be seen.