There has been a real boost in the housing market over the past six months as a result of the stamp duty holiday. We wanted to explain how this works so that you can take advantage of it if you are looking for a new property either to live in or as a ‘buy-to-let’ investment.
Usually, buyers have to pay stamp duty when they buy properties for more than £125,000.
Below we show what the normal stamp duty rates are in England and Northern Ireland. It is charged on a tiered basis, so the more expensive the property, the more stamp duty you pay.
Normal stamp duty rates:
Up to £125,000: 0%
On the portion from £125,001 to £250,000: 2%
On the portion from £250,001 to £925,000: 5%
On the portion from £925,000 to £1.5m: 10%
Above £1.5m: 12%
First Time buyers
However, first-time buyers are exempt from paying stamp duty on the first £30,000 as long as the property is less than £50,000 in total.
Stamp duty holiday
In July 2020 the Chancellor, Rishi Sunak announced that the threshold for stamp duty will be increased to £500,00 in England and Northern Ireland.
The stamp duty holiday will run until 31 March 2021. If you are looking to buy a new property, there is still time to do this, but you would need to make sure that the sale is completed on time. In the UK the average time it takes to buy a house once you have found the property is 12 weeks.
Recent stats published by Rightmove do show that in October properties were selling quicker than this time last year. But to take advantage of the stamp duty holiday, you would need to ensure the buying process from agreeing on the mortgage to conveyancing is speeded up as well to meet the March deadline.
Many residential property investors are taking advantage of the stamp duty holiday to increase their property portfolio. Some data gathered by Zoopla in September 2020 indicates that most sales agreed in the final quarter of a calendar year will complete by the end of the first quarter of the next under normal market conditions. However, 54% of sales agreed in January will complete by the end of the first quarter, falling to less than a fifth in February.
Therefore, if you are looking to buy new properties in the coming months, you do need to act fast to take advantage of the stamp duty holiday. We regularly work with property investors and landlords, so if you do need any advice on the impact of building your property portfolio on your tax liabilities, please do contact us.
You can call 01623 490 120 or email