What is the Stamp Duty Holiday?
In July 2020, the Chancellor Rishi Sunak announced a plan to boost the housing market, by introducing the stamp duty holiday. The threshold previously was set at £125,000, which until March 2021 has been raised to £500,000.
This means that if you are purchasing a home in England or Northern Ireland, you will pay zero stamp duty up to the value of £500,000.
How Long Does Stamp Duty Holiday Last?
The Stamp duty holiday started back in July 2020 following a slump in the housing market, following Coronavirus. In an effort to boost the market, the stamp duty holiday was introduced on a temporary basis and will continue until March 2021.
Stamp Duty Explained
Before the Stamp Duty Holiday, when purchasing a property or piece of land, stamp duty is charged on a tiered basis if the property or land is in excess of £125,000. Anything under this amount is not subject to stamp duty.
Normally the rates are as follows:
- £125,001 to £250,000 = 2%
- £250,001 to £925,000 = 5%
- £925,001 to £1,500,000 = 10%
- Above £1,500,501 = 12%
The only exception to this is for first time buyers, who pay zero stamp duty on the first £300,000 IF the property doesn’t cost more than £500,000.
With the stamp duty holiday, you will pay zero stamp duty for the first £500,000 regardless of the price you pay for your new property. This is for first time buyers and those selling a home and buying a new one.
Does Stamp Duty Holiday Apply If You’re Buying A Second Home?
If you are fortunate enough to be able to purchase a second home, there are extra figures you need to take into consideration.
Whilst the first £500,000 isn’t subject to the standard stamp duty, the property will be subjected to a holiday 3% stamp duty surcharge.
This still saves the purchaser vast sums of money, as the 3% rate was initially applied to the first £125,000, with additional higher rates above that.
How To Take Advantage Of The Stamp Duty Holiday
If ever there was a time to buy a new property, it’s now. But with a date set for the stamp duty holiday to come to an end, one of the main issues is time.
Whilst months may seem like a long time, if you have a long chain, this can delay the sale and purchase of a new property by weeks and sometimes months.
The average property sale takes around 14 weeks.With that in mind, time is of the essence. The quicker you can get things moving the better.
Make sure you have any and all paperwork that’s needed to sell your property or gain your mortgage. The trick is to be as organised as possible.
Don’t act hastily and purchase the first thing you see. This is one of the biggest purchases you’ll make of your life. So make sure you don’t rush your decision.
One of the best things you can do to get things moving quicker for you, is applying for a mortgage in principle. Research conveyancers, find a solicitor, all the things you can do to prepare for the sale, do them. It will all help in your ability to take advantage of the stamp duty holiday.
Stamp Duty Tax Calculator
Stamp duty calculations can be confusing at the best of time, not factoring in the new changes. Because of this, we’ve found this handy tool to help you work out your stamp duty. Check here.
How Does Stamp Duty Holiday Affect Holiday Homes & Buy to Let Properties?
Purchasing any additional home to your main residence, be it a holiday home or a buy to let property, means that the property is subject to additional stamp duty on top of the standard figures.
Whilst there is the benefit of no stamp duty for the first £500,000 on the standard tier, there is a 3% additional stamp duty that will have to be paid up to £500,000.
This still saves both holiday home purchases and buy to let purchases vast sums of money. Approximately a third of what the typical bill would be.
How Does Stamp Duty Holiday Affect Help to Buy and Shared Ownership Properties?
With the increase in the Stamp Duty Allowance, those purchasing Help to Buy properties all across the country will benefit.
The Stamp Duty Holiday increases the threshold from £300,000 to £500,000. Although purchasing a property between £500,000 -£600,000 means the buyer will also benefit from paying minimal stamp duty.
Those purchasing a shared ownership property pay their Stamp Duty a little differently, with a few options available.
Because shared ownership means you only purchase a share in the property. You have the option to purchase either the Stamp Duty on the full amount of the property. Or just on the portion of the share you are purchasing.
Now that the threshold has increased to £500,000, it would be a sensible option to pay the full stamp duty amount if your property is valued up to £500,000. The best thing to do in this situation, is discuss this in depth with your solicitor, and work out the costs involved before you proceed.
To Conclude: All Things You Should Know About The Stamp Duty Holiday
There are vast savings to be made if you’re in the position to be purchasing a property. Be it a new home, your first home, your next home, or a holiday home.
Whether its Shared Ownership, Help to Buy, Buy to Let or an outright sale, there is money to be saved. Rushing out to purchase a home just for the sake of it is obviously not the way to buy property. But if you are on the hunt for a property, now is a great time to be looking.
Make sure you look into the facts and figures, and see how much you could save. However, do not rush into making what could be a once in a lifetime purchase.
Contact Norwich Home Buyers Today
If you’re looking to sell your property in Norwich, Norfolk or Suffolk, feel free to contact us today to have a friendly discussion about how we might be able to help.
Norwich Home Buyers have a wealth of knowledge on the local area and we have a firm pulse on sale prices from all corners of the area.
Contact us today to discuss how we can help.