Our Sales Director, Tony Wing DipSurv MRICS FNAEA, assesses the Chancellor of the Exchequer’s stamp duty changes - designed to stimulate the property market.
With post-Covid demand for property at a welcome high level, one thing was needed to help create what could be the most active market since the great recession: greater affordability.
So it might be seen by some that the Chancellor has gone a long way to help through his mini-budget. From 8th July 2020 until 31st March 2021 there will be a temporary stamp duty holiday on the first £500,000 of all property sales in England and Northern Ireland. This does not affect Scotland and Wales, which have their own property transaction tax regimes.
The aim is to boost the housing market and the wider economy to help the UK recover from the consequences of the coronavirus pandemic. The chancellor appears to be hoping that by the time we reach March 2020, the normal spring push will help keep the housing market moving forward under its own steam, as the fuel of a stamp duty holiday is withdrawn.
Under Sunak’s change buyers of second homes and buy-to-let properties will also benefit, but will still have to pay the existing 3% extra duty due on the entire price. However, in relatively low house price regions, this is unlikely to give investors added stimulus to delve deeper in their pockets and snap up
During this tax holiday, the average stamp duty bill will fall by £4,500, and almost nine out of ten people buying a main home this year will pay no stamp duty at all. Anyone buying a home for around £475,000 will save almost £14,000 in tax.
We in the property industry have long called for the government to overhaul a tax that has become a serious hindrance to buyers. Although seen as unfair by many, the government’s annual return from stamp duty is around £12bn - roughly equivalent to 2% of the Treasury's total tax income. However, even the Prime Minister has said in the past that he wanted to scrap stamp duty up to £500,000 and reduce the top rate – on homes costing more than £1.5 million – from 12% to 7%.
With the Halifax announcing, unsurprisingly, that house prices have fallen during the four months of lockdown, the new stamp duty level and the increased desire by many to make a lifestyle change mean this is the best time for years to buy a property. As any farmer will tell you, make hay while the sun shines - it’s all getting very interesting!
The Robert Bell & Company Team