At the beginning of July, Chancellor Rishi Sunak announced a stamp duty holiday until the end of March 2021. During lockdown, this scheme was widely supported by property professionals as a way of boosting the UK’s housing market once it reopened. Now the housing market is again up-and-running and the stamp duty holiday is in full swing, we’ve put together a guide as to what that means for property investment opportunities.
What are the changes?
The threshold for stamp duty land tax (SDLT) has risen to £500,000 for all properties in England and Northern Ireland. This means that between July 8th 2020 and March 31st 2021, anyone buying property in these countries that is valued below £500,000 will not pay SDLT. These changes to not apply to property in Scotland or Wales.
By announcing these stamp duty changes, the government is hoping to encourage more people to buy property. An increased number of people buying property will help boost the economy following the damaging effect of the global coronavirus pandemic.
Who do they apply to?
The changes apply in full to anyone buying a primary residence in England or Northern Ireland. They also apply – albeit with some variation – to overseas investors and people buying a second home or buy-to-let property.
Purchases of second homes, buy-to-lets, or properties from overseas investors will still benefit from the raised SDLT threshold. These investors will just need to pay the current 3% SDLT surcharge, so investors should take advantage of any property investment opportunities available during the stamp duty holiday to get the best for their money.
It is important to note that the SDLT changes only apply to residential property; not purpose-built student accommodation.
How much could I save?
There are huge savings to be made for property investment opportunities during this period. Before the changes, a property investor could expect to pay £29,920 in SDLT on a £499,000 property in England or Northern Ireland.
Now, investors would only need to pay the 3% surcharge of £14,970. That’s a saving of almost £15,000.
What happens after?
There is nothing to suggest that SDLT rates won’t revert back to normal on April 1st 2021.
However, from April 1st 2021, overseas investors will be subject to an increased 2% surcharge when buying residential property in England or Northern Ireland. Overseas investors are advised to take advantage of any property investment opportunities before this happens.
Find out more
To find out more about what the stamp duty changes mean for you and your property investment opportunities, contact North Property Group today.