What the New Stamp Duty Holiday Means for Homebuyers
The number of buyers searching for Doeshomes in the UK has risen greatly ever since the Chancellor’s announcement of a stamp duty holiday.
In July of this year, Chancellor Rishi Sunak made the announcement of a temporary stamp duty holiday for homebuyers in England and Northern Ireland; the stamp duty holiday will remain effective until the March of next year and will apply to the first £500,000 of all sales made in the real estate sector.
We’re barely two months into the announcement and its impact is already evident—there has been a surge in sales of properties selling between £400,000 and £500,000. The reason is simple—homebuyers in England and Northern Ireland can now save up to £15,000 when they buy properties worth £500,000 or less.
Considering that the stamp duty holiday has an expiry date of next March, we are likely to see a lot of properties being sold between now and then—a number that is likely to be much higher than the total properties sold between July 2019 and March 2020. But, what does this all mean for homebuyers? We answer that here.
What Is Stamp Duty?
Although there is a lot of buzz around stamp duty holiday in England and Northern Ireland these days, many potential homebuyers are not sure what’s all the hype about. This is mainly because many potential homebuyers have never heard of “stamp duty.” If you’re one of them, then you need to know that stamp duty is nothing but the tax you pay when buying a property.
If you live in England or Northern Ireland, then this would be the ‘Stamp Duty Land Tax’ that you will be required to pay on the purchase of a property. Although stamp duty needs to be paid by homebuyers throughout the UK, the stamp duty holiday announced in July this year will apply only to buyers in England or Northern Ireland. So, if you live in Scotland or Wales, then you would have to continue to pay the stamp duty that applies to property buyers in these regions.
If I Buy a Property in England or Northern Ireland, How Much Money Can I Save with the Stamp Duty Holiday?
This is the burning question that most potential homebuyers in England or Northern Ireland have about the stamp duty holiday. Before we get to the answer, let’s make one thing clear—you don’t get any stamp duty holiday when you buy a property that’s worth more than £500,000. This means that you will have to pay stamp duty on the purchase of your property selling for £500,000 or more. However, you can still save on the purchase of these properties as there has been a change in the amount of stamp duty that needs to be paid for them following the announcement.
So, what is the exact amount of money you can save if you buy a property in England or Northern Ireland after the announcement? The following table provides all the answers you need.
|Price of Property||Stamp Duty Amount Before the Holiday||Stamp Duty Amount After the Holiday||Saving|
As shown in the table above, you don’t have to pay any stamp duty if you buy a property worth £500,000 or less. However, there is some good news for buyers of properties that are worth more than this. You can now save up to £15,000 if you buy a property priced between £600,000 and a million, although you will still have to make a stamp duty payment.
Am I Eligible for the Stamp Duty Holiday?
You are eligible for stamp duty holiday as long as your property purchase is completed after 8th July and not later than 31st March. Also, you need to be a resident of England or Northern Ireland to qualify for stamp duty holiday when you buy a property there. If you fulfil these two requirements, then you are eligible for the new stamp duty holiday announced by the Chancellor.
While you may be tempted to spend all your savings on a home purchase after the announcement of the stamp duty holiday, we would recommend that you go ahead with the purchase only if you were already contemplating buying a home before the announcement was made. You were going to buy a home anyways, so why not save some money while doing that?