By David Williams, Director & Head of Property
In an attempt to boost the housing market following the lockdown, the government has raised the stamp duty (SDLT) threshold in England and Wales to £500,000.00 until March 31st 2021. This will result in significant savings for home buyers both above and below the £500.000.00 threshold.
The tiered system applied to stamp duty means buyers purchasing up to £500,000.00 will pay no stamp duty and those purchasing at a higher price will only pay at the normal rates on the value above £500.000.00. The new rates will be: –
£0-£500,000 = 0%
£500,001-£925,000 = 5%
£925,001-£1.5m = 10%
Above £1.5m = 12%
The government predicts that the average stamp duty bill will fall by £4,500, but for properties priced at £500,000 the saving could be £15,000.
If you are buying a second home or buy to let property the 3% stamp duty surcharge will still apply. However, the surcharge will be against the new rates resulting in savings for properties over £125,000.00. Before the change, if you bought an investment property for £250,000, you would have paid 3% on the first £125,000 and 5% on the second £125,000, resulting in a stamp duty bill of £10,000. From today, you’ll only pay 3% stamp duty on the whole purchase price, meaning a bill of £7,500 and a saving of £2,500.
The rates for second properties and buy to let are below.
£0-£500,000 = 3%
£500,001-£925,000 = 8%
Percentage £925,001-£1.5m = 13%
Above £1.5m = 15%
With the new rates for duty, and the extremely low interest rates being offered by lenders, it would seem there has seldom been a better time to purchase.