The stamp duty holiday announced by the Chancellor on the 8th July could save home buyers in England up to £15,000. Previously, movers had to pay Stamp Duty on any homes costing over £125,000, but now that threshold has been raised to £500,000. This means that a buyer of the average home in England, worth around £250,000, would pay no stamp duty at all, saving about £2,460. Someone buying a £500,000 property would save up to £15,000.
Homes which cost over £500,000 will have to pay stamp duty, but £15,000 less than before, which is significant. In our area, 89.1% of sales were under £500k in the first quarter of 2020, so under these new rules, a good proportion of local homeowners could pay zero stamp duty.
The most significant saving is for home movers; remember first-time buyers already don't have to pay stamp duty on property worth under £500,000. However, first-time buyers still benefit because more movement among home movers and downsizers will free up much needed housing stock, so there’ll be more choice for first-time buyers.
We expect that this change in policy will not only provide a big boost to transactions, but be beneficial to the wider economy. The first way is direct; people will be able to relocate to areas with stronger, more productive employment markets. The second way is indirect, and perhaps more important in the short term. Home moving is an event which feeds a wide array of industries and livelihoods. The more people move home, the more work there is for removal firms, furniture makers, and decorators, solicitors to name but a few, all of which will boost the economy.
Investors and second home buyers still have to pay the additional 3% rate brought in by former Chancellor George Osbourne in 2016. However, these buyers still benefit from the same higher nil rate as everyone else. Someone buying a second home worth £500,000 would pay £15,000 in stamp duty, half the previous bill. The holiday will last until 31st March 2021, but the Chancellor has indicated this could be the start of a more permanent lowering of the tax.
Overall, we’re big fans of any policy which gets the property market moving. The reduction in tax as an obstacle means we can help more people make their next perfect move. If you’re wondering if now is the right time, please give us a call so we can discuss your options.
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