Since the property market reopened on May 13 after a period of hiatus, the signs that activity has recovered to near levels recorded before the coronavirus pandemic have been very positive.
This month, the market and in particular those looking to purchase a property, received another boost in the form of a stamp duty holiday.
The measure was announced as part of a mini summer Budget, which included a range of policies aiming to get the economy back on track post-lockdown.
To provide a helping hand to buyers and sellers, below we analyse how the stamp duty holiday works and how much you could save.
Stamp duty holiday – how will it work?
On July 8, Chancellor Rishi Sunak announced that a stamp duty holiday would be introduced immediately, running until March 31 next year.
The tax cut, which had been called for by many housing market commentators, means there will be no stamp duty due on the first £500,000 of all property sales in England and Northern Ireland.
Prior to the announcement, the stamp duty threshold was £125,000 – this has now been raised to £500,000. It has been estimated by the Chancellor that around 90% of all main properties purchased from now until the end of next March will be exempt from stamp duty.
Rightmove suggests that 81% of all homes for sale in England have asking prices set below £500,000 and that 84% of its buyer enquiries are for properties priced below the new stamp duty threshold.
How much could you save when buying a home?
The headline is straight-forward – if you buy a home costing less than £500,000 over the next 10 months, you won’t be required to pay any stamp duty. For buyers across South East London, savings could be considerable.
Rightmove reports that the average asking price for a London property in June was £628,284, meaning the typical purchaser in the capital will save around £15,000.
Looking at some lower priced examples, buyers picking up properties for £250,000 will save £2,500, while those purchasing for £300,000 and £400,000 will save £5,000 and £10,000 respectively.
Buyers making significant tax savings could use the extra money to renovate their new property or up their budget to purchase a slightly more expensive home in the first place.
Will property investors still have to pay stamp duty?
The 3% stamp duty surcharge on the purchase of additional homes (second properties and buy-to-let investments) will still apply. However, purchasers won’t be required to pay the traditional stamp duty tax on the first £500,000 of the sale price.
This means if you are buying a second property for £350,000, you will now pay a stamp duty bill of £10,500 instead of £18,000 – a saving of £7,500.
For purchasers of more expensive second properties, there will also be significant savings. A second property costing £575,000 will now cost the buyer £21,000 in stamp duty, down from a whopping £36,000.
What about first-time buyers?
First-time buyers have been exempt from stamp duty for the first £300,000 of a property purchase since 2017 – a policy which has been widely praised.
However, the new stamp duty measures mean that those first-timers purchasing more expensive properties – most likely to be in London and the surrounding areas – will now benefit too.
How could the stamp duty cut help the market?
It has been well-documented that the property market has recovered strongly from the lockdown period, particularly when it comes to demand for homes. It should be the case that the stamp duty cut will get the market moving even faster over the coming months.
Rightmove reports that in the first 30 minutes after Rishi Sunak’s announcement, traffic on the property website soared by 22% as buyers considered their options.
Visits to the site hit 8.5 million on July 8, up from 7.7 million the previous day. Meanwhile, the number of people phoning and emailing estate agents about property for sale hit a new record on July 8, up 93% on the same day in 2019.
Potential sellers have also sprung into action, with requests for valuations up 35% on the previous record set in June and up 89% on the same day in 2019.
The stamp duty holiday is set to provide a big boost to the property market as buyers look to take advantage of big savings and sellers aim to capitalise on increased demand from purchasers.
Buyers can benefit from a wider pool of homes available, while sellers will have an increased chance of selling quickly and for the best possible price due to higher competition.
If you are thinking about selling your home, now is a great time to come to market. Although demand from buyers will be high, competition between sellers will also surge so it’s advised that your property is in the best possible condition and you sell with a reputable local estate agent.
For more information on the stamp duty holiday and what it means for you, get in touch with Key Property Consultantstoday. We are on hand to help you through every step of the moving process.
Request a free and instant online valuation to find out how much your property could be worth for sale or to let.
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