The rate at which home buyers in England and N.Ireland will be required to pay SDLT has been raised from the current level of £125,000 and will now be at zero rate up to £500,000. Scotland and Wales have their own versions of SDLT and announcements from each of the respective devolved governments are expected.
This move by Chancellor Rishi Sunak is in response to the 50% decline in housing transactions caused the Coronavirus and the widespread lockdown imposed by the UK government. The changes are effective from 8th July and will run until 31st March 2021. There is no change to the 3% additional charge for purchases of second homes including buy to let properties. So a purchase of a £500,000 property as a buy to let will now result in a charge of £15,000 in SDLT not £30,000 as previously was the case.
Purchases above the £500,000 benchmark up to £925,000 will attract a charge of 5% and a rate of 8% if the acquisition is a second home or buy to let. Note these charges are only liable on the amount above £500,000 and up to £925,000.
These changes apply to purchases made by both individuals and companies.
Mark Hayward, Chief Executive, NAEA Propertymark said: “Following our engagement with the Treasury and MHCLG over the past few months, we welcome the Chancellor’s announcement that he will be raising the threshold at which buyers will pay stamp duty to £500,000.
“This a is a welcome commitment by the government and we are glad that they have listened to calls to help sustain the property market following lockdown. These measures will enable people looking to buy a home to have the confidence and stability to be able to move forward with their purchase, which in turn will have a knock on effect on the wider economy as people buy white goods and furniture.
“The market is moving well at the moment, however once the furlough period has ceased and the anticipated recession hits, the market might well need further financial impetus, therefore it is right that the sector is given the support and tools it needs to rebound over the next 9 months.”
According to the Centre for Economics and Business Research (Cebr) this move by the Chancellor will save purchasers an estimated £4,400 from the average property transaction. This estimate is based on analysis by the Office for Budget Responsibility on the statistical relationship between stamp duty and transaction volumes,
Cebr estimates that this policy change will lead to a 6% rise in property transactions over the next nine months, equating to 41,000 additional property sales. Furthermore, they expect around 60,000 transactions to be brought forward as people will try to make use of the discount before the tax increases again in April 2021.