8 July 2020
Stamp duty holiday a shot in the arm for the housing market
As widely trailed earlier in the week, the Chancellor of the Exchequer has announced that from today until 31 March 2021, buyers in England and Northern Ireland will pay no stamp duty on the first £500,000 of the purchase price when they move home. Rishi Sunak said this would mean nearly 9 out of 10 people getting on or moving up the ladder would pay no stamp duty at all, while the average stamp duty bill would fall by £4,500.
It is great news that the measures are coming in immediately as there were fears that they would be introduced in the autumn, meaning buyers and sellers would bide their time and wait until then before taking action. Given that the market is only just getting back to business after a prolonged lockdown, this would have had a devastating impact. Instead, it is likely to provide a shot in the arm for the housing market.
While first-time buyers were already exempt from paying stamp duty on properties costing up to £300,000, the changes mean that anyone buying a property will now benefit from a stamp duty saving. This also includes landlords, those buying via a limited company and second homeowners, although they will still have to pay the 3 per cent surcharge on the entire price. A homemover buying a home for say, £600,000, will pay no stamp duty on the first £500,000 and 5 per cent on the next £100,000, resulting in a £15,000 saving (their stamp duty liability would now be £5,000 instead of £20,000 under the old rules).
With lenders keen to lend and interest rates at record lows, the stamp duty holiday should mean the housing market is set for a busy summer and autumn.