The Chancellor yesterday announced that we can have a holiday this year after all, but not to a far flung destination. Instead, he has announced a “stamp duty holiday”.
Homebuyers in England currently pay stamp duty land tax (SDLT) on the purchase of a residential property which, until midnight on Tuesday, was payable on property purchased for £125,000 or more, with some concessions for first time buyers and surcharges for those buying second homes or buy-to-let properties. The greater the value of the property, the higher the rate of SDLT; by way of example, for the average house price of £248,000, the SDLT bill payable by the purchaser would have been £2,460.
For property transactions completed from Wednesday 8th July until next March, the threshold will be increased so that, if the property you are buying costs less than £500,000, you will pay no stamp duty. This means a potential saving of up to £14,999. The Chancellor claims that 9 out of 10 people buying a main home this year will pay no stamp duty at all.
If the property you are buying costs £500,000 or more, the rate will be 5% on the value over £500,000, rising to 10% on the value in excess of £925,000 and 12% on any value over £1.5m.
Landlords and purchasers of second homes will also benefit from the cut, but they will still pay the 3% surcharge on the entire price.
As with all holidays, there could be a period of frenzied activity at the start followed by a slump when it’s over, but the cut is clearly aimed at boosting the property market for the short term at least.