The UK government has announced a stamp duty holiday in England and Northern Ireland on all property purchases completed by March 31st 2021. This means that around 9 in 10 property transactions will no longer be subject to stamp duty, and the average stamp duty bill will fall by £4,500. While the stamp duty cuts will benefit those buyers looking to purchase a new main property the most, even buyers of second homes and buy to let properties will be able to take advantage of the cuts.
What Is The Stamp Duty Holiday?
Buyers in England and Northern Ireland must pay stamp duty on all purchases of land or homes worth £125,000 or more. This is charged on a tiered basis, with more stamp duty charged on more expensive purchases. On top of this, people buying second homes typically have to pay an additional 3% on top of regular stamp duty rates.
The recent stamp duty tax cuts mean that stamp duty rates are reduced in most cases, with many buyers able to avoid them altogether. Stamp duty is currently axed on purchases of up to £500,000, with reduced rates for more valuable properties at the following levels:
- Up to £500,000: 0%
- £500,001 to £925,000: 5%
- £925,001 to £1.5m: 10%
- Above £1.5m: 12%
For buyers of second homes, the 3% additional tax still applies, but so do the cuts above. This means that buyers of second homes will have to pay just 3% on properties up to £500,000 in value, compared to the 3% + regular stamp duty they would have been paying before the holiday.
What Does This Mean For Your House Purchase?
While these figures might not sound like much, they can have a significant impact on the cost of buying a property for prospective buyers. To illustrate how much buyers can save by buying during the holiday period, let's take a look at some examples of how much cheaper certain purchases will be between now and March 31st 2021 compared to previous stamp duty rates:
- Buying your next main home worth £250,000 - £300,000: a saving of £2,500 - £5,000
- Buying your next main home worth £350,000 - £400,000: a saving of £7,500 - £10,000
- Buying an additional property worth £200,000 - £250,000: a saving of £1,500 - £2,500
- Buying an additional property worth £300,000 - £350,000: a saving of £5,000 - £7,500
How Can Bowsers Help?
It's not always easy to figure out just how all the new rules and rates that have emerged over the past three months will affect you. For expert legal advice and information about property purchases and stamp duty rates over the next six months, don't hesitate to get in touch with us at Bowsers Solicitors.
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