Chancellor Rishi Sunak has this week announced a Stamp Duty Land Tax (SDLT) "holiday", which will run from 8 July 2020 to 31 March 2021 and which looks like being a real shot in the arm for the recovery of the housing market.
Before today, purchasing residential property incurred SDLT on the purchase price above £125,000 (or £300,000 for first time buyers). This tax free threshold will now increase to £500,000. The change will apply to purchases by companies as well as individuals and also increases the initial tax threshold for purchases of additional properties (the initial 3% tax band has been increased from £125,000 to £500,000).
Since estate agents were permitted to reopen their doors on 13 May, we would expect that this latest announcement will provide a genuine stimulus to the UK property market. In particular, a combination of the remaining months of the existing Help to Buy scheme and fairly competitive mortgage markets in light of record low base rates, we are expecting to see a significant increase in market activity for the remainder of 2020. As well as a significant saving for individual buyers (and first time buyers in particular), this announcement should also prove to be a welcome opportunity for residential property investment companies who will see a reduced SDLT rate for purchases of additional property.
We would expect this latest announcement to give a particular boost to our property clients in the North East, with average property values lying comfortably within the latest £500,000 threshold (as of January 2020, the average property values in the North East stand at £196,325 for new build homes and £123,066 for existing properties), most purchasers will be able to benefit from saved SDLT.