Chancellor Rishi Sunak has confirmed that the Stamp Duty threshold will be increased to £500,000 immediately until March 31 next year.
Sunak confirmed rumours of the Stamp Duty holiday during his summer economic update this afternoon.
He said the Government will temporarily increase the nil-rate band of residential Stamp Duty in England and Northern Ireland from £125,000 to £500,000.
This will apply from today until March 31 2021.
The Treasury said nearly nine out of ten people getting on or moving up the property ladder will pay no Stamp Duty at all.
The aim is to boost the housing market and the wider economy to help the UK recover from the consequences of the coronavirus pandemic.
It comes after the property market was effectively closed between the end of March and mid-May.
Agents and portals have said there has been more demand since the market reopened but it is so far unknown if this will transfer into sales.
Rightmove said there are more than 510,000 properties with asking prices under £500,000 on the portal, making up 81% of all residential stock for sale in England
The property website said 291,000 properties under £500,000 are currently available for sale, making up 78% of all properties listed in England.
It said people enquiring about properties under £500,000 on Rightmove makes up 84% of all buyer enquiries in England.
Mark Hayward, chief executive of NAEA Propertymark, took some of the credit for the changes.
He said: “Following our engagement with the Treasury and Ministry of Housing over the past few months, we welcome the Chancellor’s announcement this afternoon that he will be raising the threshold at which buyers will pay stamp duty to £500,000.
“This a is a welcome commitment by the Government and we are glad that they have listened to our calls to help sustain the property market following lockdown.
“These measures will enable people looking to buy a home to have the confidence and stability to be able to move forward with their purchase, which in turn will have a knock on effect on the wider economy as people buy white goods and furniture.
“The market is moving well at the moment, however once furlough has ceased and the anticipated recession hits, the market might well need further financial impetus, therefore it is right that the sector is given the support and tools it needs to rebound over the next nine months.”
Mark Peck, head of residential at Cheffins estate agency, said this could provide the incentive many unsure buyers and sellers need.
He said: “Whilst the market has already been significantly busy post-lockdown, cutting Stamp Duty on purchases up to £500,000 really will be the catalyst get the industry flying.
“The most likely impact of this measure will be a flood of buyers coming into the market who previously had sat on their hands due to political and economic uncertainty, and this flurry of activity will bring with it price rises as demand outweighs supply.
“However, it will also be a stimulant for those considering selling as people look to make the most of a buoyant market during the tax holiday.
“Whilst the virus certainly will have had a long-lasting effect on the property market, it has also meant that many people’s situations have changed and with diminishing pressure to work five days a week from the office, new working hours and other varying priorities, this stamp duty reduction will provide the additional push for many to take the plunge and get on with house moves.”
He suggested it would also boost those with a low deposit as they could now increase it with the Stamp Duty savings.
However, Miles Robinson, head of mortgages at online mortgage broker Trussle, warned this could create bidding wars that push the price up and some sellers may list at higher prices.
He also suggested this would benefit second steppers more than first-time buyers who already have an exemption up to £300,000.
Charlotte Nixon, mortgage expert at Quilter added that a lack of mortgage deals may make it harder for everyone to benefit.
She said: “Lots of first-time buyers face a significant challenge as many lenders have pulled their 95% and 90% loan to value (LTV) products.
“This means in effect that the goal posts have been moved for these buyers as they now need to find a 15% to 20% deposit for their first home instead of just 10% or 5% prior the pandemic.
“Unfortunately, due to the poor economic sentiment at the moment lenders are being very cautious about affordability.
“Whether the Government could support lenders with government backed products for higher LTV deals and enable more first time buyers to enter the market remains to be seen.”
UPDATE 2pm:
HMRC guidance shows buyers of a main residence will get a full exemption but those purchasing an additional property would still have to pay 3% on the first £500,000 of a purchase.
https://www.gov.uk/guidance/stamp-duty-land-tax-temporary-reduced-rates
Do we know if the stamp duty holiday extends to second/investor/limited company purchases?
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Only on primary residence.
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Is that correct as he said all house sales
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His twitter account: ” Everyone buying a main home under £500,000 will pay no stamp duty at all. It takes effect today until March 31st 2021 and means 9/10 people of main home buyers will pay no SDLT at all.”
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The Inland Revenue don’t agree.
As a result, far too many social media posts are pushing Chancellor speech, rather than what the Revenue now spell out as the actual detail
The change was simply an increase to the threshold from £125k to £500k. Nothing else. Ignore the ‘main home’ comment, the Exchequer should have known better than to use that language: https://www.tax.service.gov.uk/calculate-stamp-duty-land-tax/#/intro
The catch, is that the ‘own more than one residential property anywhere in the world’ 3% surcharge still applies. People will overlook that and underpay.
True, that charge now ends up being less, as the first 3% band is now wider pushing the next bands higher too: 3% up to £500,000 8% on the next £425,000 13% on the next £575,000 15% on anything above that
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what happens past £500K is it all the stamp duty or is that staggered
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In your rush to have a headline you’ve missed out the important stuff as usual! The facts!
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It looks like this is all that is availble at this moment in time:
https://www.gov.uk/government/news/rishis-plan-for-jobs-will-help-britain-bounce-back
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We are selling houses at an unprecedented rate and personally I don’t think a reduction in stamp duty will make any difference as they’re selling regardless. The bigger issue is that lenders have removed all the 90% and 95% deals. Surely the government would have been better acting as ‘imdemnifiers’ on lending above 85% as in the old days of the MIG premiums. This would help first time buyers massively which has a knock on effect for the rest of the market. This would have been cheaper for the government but much more effective.
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Hi Peeps, I have missed this speech, If I am buying at £800000 do I pay stamp duty as I knew it was yesterday or am I paying on only that amount above 500k?
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Difficult to say. The latest HMRC webpage suggests below £500,000 is nil and beyond that 5 per cent but the calculator works out the tax on a £525,000 house as £16,250 when it could be just 5 per cent of £25,000 (£1,250), meaning either you pay on everything or they are not up to speed! Usual chaos of policy leaks unsupported by substance!
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Hi Essjaydee51
According to the Gov.uk Stamp Duty Calculator as at 14.35, this is what you would be expected to pay
Purchase price bands (£) Percentage rate (%) SDLT due (£)
Up to 125,000 0 0
Above 125,000 and up to 250,000 2 2,500
Above 250,000 and up to 925,000 5 27,500
Above 925,000 and up to 1,500,000 10 0
Above 1,500,000+ 12 0
Total SDLT due 30,000
(the above stands whether or not you have owned another property)
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So Mark Peck at Cheffins thinks
“… this flurry of activity will bring with it price rises as demand outweighs supply.”
thus negating the saving on STLT, no doubt. Potentially making the property more expensive to buy than it would have been prior to the measures being implemented’.
D’oh!
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“Mark Hayward, chief executive of NAEA Propertymark, took some of the credit for the changes.”
Be wary of what you try to poach the glory for, Mr Hayward – this one’s a potential @$$-biter of biblical proportions if Mr Peck’s stated effect of these measures comes about…
I’d stick to taking credit for NAEA standing by and allowing Pay Regardless Agents to take countless £millions from expectant – but unsuccessful – homesellers for the last decade or so instead. People don’t seem to have an issue with that one.
Yet.
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According to the gov.uk Stamp Duty calculator, if I was buying a property at £475000, with a completion date set for 31/7/20, I would be paying £8750 SDLT if I had never owned another property; and £13750 if I had previously owned a home.
So if they haven’t got the nous to update their own departments in order for them to reprogramme their chuffin’ calculator yet I wouldn’t be expecting any clarity anytime soon…
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It seems they have now updated their calculator.
Better late than never, I suppose…
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It is, as before, 3% above what someone not buying a second property ( but not a first time buyer) will pay
So up to £500,000 = 0% + 3% = 3%
Just over £500,000 = 3% on £500,000 and 8% on the next slice
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A Company buying a property up to £500k pays no stamp duty – not even the 3%
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Divert the Stamp Duty that would be saved to assist the first time buyer sector (who don’t benefit here) by doing such things as underwriting higher percentage mortgages or extending HTB to the secondhand market. Without FTBs, you don’t have a market.
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Shambles!
The Chancellor promoted a poster saying “everyone buying a main home under £500,000 will pay nothing”. Obviously suspending the 3% surcharge if the purchase is a main home/residence.
The Revenue dsiagree, and say that you must still be replacing your main residence to avoid the 3% surcharge.
Has the Chancellor been overruled? Not a great start for this future PM
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OFFS
I loathe this government and all the cr*p that it has and is inflicting on this country…
But I do not think we can reasonably expect any Minister to cover off every single base when they announce something major like this SDLT change.
Yes, you might say Sunak has misspoken or downright got it wrong. But these days everyone is an instant expert/pundit/commentator. It will be sorted in the next few days. Have some patience.
You want to find out how hard a political job is these days? Try it. 99% would not last five minutes.
I don’t want them governing us but I am prepared to cut them some slack in dealing with this unprecedented situation – even if they fail.
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Many of the self proclaimed property experts who appear on social media and have been all over my feeds in the past weeks with comments like “the market is flying” and “we have never been busier” would have you believe things are so robust this holiday is not really necessary. When in fact of course we are merely in a bubble and the sad truth is they inevitably burst.
The sensible approach would probably therefore have been to keep the lid on the policy now and announce in the October budget? That would have prolonged the feel good factor at a time when the recession is likely to be biting hard. All this policy has done is effectively extend that existing bubble to next March. So now all that will happen is that the property market will fall off a cliff next April, and house values will plummet. Adding to the recessionary effects at that time.
Does the Chancellor not have advisers who know these things? Does nobody know their history?
Scary that the long term effects on the property market and therefore the economy have been overlooked for short term headlines.
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Impressive Conveyancing
The Chancellor’s poster is not at all inaccurate
If someone is buying a main home then either they are currently in rented accommodation or they are in fact replacing their owned main home. It is not possible for SDLT purposes to have more than one main home
And a company buying a house for £500,000 would pay nil stamp duty . But it would pay £15,000 in stamp duty land tax
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Be careful.
A person can own a BTL (or several of them) having never owned a main home, (or having sold more than three years ago) then they come to buy one for under £500k tbecause they read (and heard) the Chancellor say buying a main home under £500k means you pay nothing……and oops, caught by 3%.
Be careful conveyancers, the headline reporting is wrong. Buying a main home under £500k can sting you for 3%.
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