Stamp Duty Holiday. What does this actually mean?
On the 8th July, the Chancellor, Rishi Sunak, announced the temporary stamp duty holiday which runs until the 31st March 2021. In an attempt to boost the property market and aid the economic recovery through increased transactions rate, the minimum stamp duty threshold has been increased to £500,000.
What has this announcement changed?
Stamp Duty Land Tax is a tax that is paid by people buying property across England and Northern Ireland. The single lump-tax applies to anyone purchasing a property or piece of land costing more than £125,000 at purchase. The amount of tax paid on the completion of the purchase is tiered – as the property price increases the rate of tax increases.
The Chancellor’s recent stamp duty announcement placed a temporary halting on the minimum threshold of property from £125,000 to £500,000. The temporary changes to the minimum threshold will mean that any buyer completing the purchase of a property under £500,000 will not have to pay stamp duty on the transaction and open up the possibility of saving up to £15,000.
The move to temporarily increase the minimum threshold at which stamp duty kicks in has been welcomed with open arms by buyers and estate agents throughout the UK, with some 9/10 buyers benefiting from this. So, what does the stamp duty holiday look like for buyers?
|Property Value||Existing Rates||Holiday Rates|
Why has the government implemented such a change?
As we slowly return to some form of normality, the government announced a range of economic measures to increase the level of general market activity in a bid to kick-start the economy back into action. Due to the interconnected nature of the property market in the UK economy, the promotion of market activity that the Stamp Duty looks to achieve is hoped to indirectly benefit partner sectors, as more and more buyers return to the market.
What does this mean for Buy-to-let or second homes?
The Stamp Duty holiday also applies to buy-to-let and second home purchases, but landlords and investors will still have pay the 3% surcharge at all levels of purchase, including those below £500,000. Although a 3% tax is still required, the announcement by the Chancellor has made it dramatically cheaper for investors to increase their property portfolio and increase the available potential return on investment. You can see below the temporary changes to the buy-to-let Stamp Duty rates.
|Property Purchase Price||Stamp Duty Rates|
|£0 - £500,000||3%|
|£501,0000 - £925,000||8%|
|£925,001 - £1.5million||13%|
How does this benefit landlords and Investors?
To gain the full benefit of Rishi Sunak’s stamp duty holiday, experts and buy-to-let brokers are recommending investors to buy quickly before the best properties are taken and new investors enter the market.
It is widely accepted that landlords need to take advantage of the stamp duty holiday before the window closes at the end of March next year. During this temporary holiday, landlords and investors will have increased access to properties that may be out of their original price range or increase their budget for their preferred property type.
How can NEPI help?
NEPI offer landlords and investors with bespoke investment opportunities in the buy-to-let market across the North East of England. NEPI is proud to provide investment opportunities for investors with varying budgets and needs.
For a full list of properties on offer from NEPI, please do not hesitate to contact a member of our team today or see our extensive list of letting properties here.
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