Government announces Stamp Duty holiday to help budding buyers

Temporary changes made to Stamp Duty Land Tax to help boost the property market

Chancellor Rishi Sunak today announced a temporary holiday on Stamp Duty Land Tax on the first £500,000 of all homes sold in England and Northern Ireland.


What is the Stamp Duty holiday?

Coming into effect from Wednesday 8th July, the government have increased the lower Stamp Duty threshold to £500,000 until March 2021 to help boost the property market and aide budding buyers who may be struggling to get on the property ladder amidst COVID-19 and the aftermath of lockdown.

This means that buyers will not need to pay Stamp Duty on property purchases below the new level – as long as completion takes place before March 31st.


What is Stamp Duty?

Stamp Duty is a tax paid by purchasers when buying a property. The amount paid will vary depending on a number of factors including the price of the property, where you are in the UK and if you’re a first time buyer. To find out more about Stamp Duty and the costs of buying a home, you can visit our info page here.


Stamp Duty on Help to Buy homes

The increase in the Stamp Duty allowance will benefit Help to Buy purchasers all across the country. For first time buyers, the level at which the Stamp Duty is payable has now effectively risen from £300,000 to £500,000 – although buyers will also benefit if the property price is between £500,000 and £600,000.

The change will take effect immediately and as Stamp Duty is payable upon completion, anyone completing on their home between now and March 31st 2021 will benefit.


Stamp Duty on Shared Ownership homes

There are a couple of different ways that Shared Ownership buyers can choose to pay Stamp Duty on their home – either by paying based on the full value of the property at the outset, or choosing to only pay Stamp Duty on the share that they’re purchasing. The latter option reduces the costs incurred at the time of purchase but means that costs may be higher if they go on to buy 80% or more of their home.

Choosing to pay the Stamp Duty in full at the time of purchase was often a good option if the full property value was below the tax-free allowance of £125,000 or £300,000 for first time buyers. However, with these changes to Stamp Duty Land Tax, it could now also be sensible for properties valued up to £500,000. If you’re in the process of buying a home, we would recommend that you discuss this with your solicitor before making a decision.

How this change will affect current Shared Owners who are looking to staircase to 80% ownership or above is not certain as of yet, but if you are already in the process, you should check with your solicitor as to whether it would be sensible to pause until there is further clarification.


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