The news that the Government has increased the lower stamp duty ( SDLT) threshold to £500,000 for property sales in England is welcome.
As long as the purchase is completed prior to 31 March 2021 no stamp duty will be paid by the purchasers up to this level. The change starts from 8 July 2020. Savings of nearly £15,000 may be achieved by buyers of properties at £500,000. It is expected that the measure will have a swift impact increasing the number of sales that occur and stabilising house prices. In our area the benefit for first time buyers will be less pronounced.
We would hope to see the Government offer additional measures for first time buyers such as to guarantee part of the loan to lenders in the near future.
As more details are provided by the Government we shall comment further.
What is stamp duty?
Stamp Duty is the old name for Stamp Duty Land tax (SDLT).
It is a tax paid by most people that buy a property in England. It applies to both residential and commercial properties.
The amount of tax paid to the Government depends on the value of the property and your circumstances. The tax is paid by your solicitor within 14 days of you completing the purchase and getting the keys.
How will the changes affect me as a buyer?
The old rules were:
- First time buyers paid no tax up to £300,000 and 5% of the purchase price on the value between £300,001 and £500,000.
- Everyone else buying their home had to pay 2% on the value between £125,001 to £250,000 and 5% on £250,001 to £925,000 and 10% on £925,001 to £1,500,000 and 12% above £1,500,000.
- Landlords had to pay extra SDLT.
New rules from now until 31 March 2021
For home buyers no stamp duty will be payable on the first £500,000 whether first time buyer or moving home for second time etc. We await clarification of the position for landlords but we understand that is likely to include landlords. As such individual property landlords may wish to consider incorporating their existing property portfolios into a limited company, whilst the SDLT rates are substantial lower. .
Will I have to pay it further down the line?
No further SDLT will be payable on this purchase.