In the last couple of weeks Rishi Sunak, the UK Chancellor, announced a number of different initiatives to stimulate the economy after the coronavirus pandemic. There were cuts to company bonuses, VAT and the introduction of “money off meals”. But the thing of most interest to property investors were the proposed stamp duty changes.
The government is keen to do all that it can to stimulate a quick recovery in the housing market. They want to stimulate a raft of new house buyers and cutting stamp duty is a good way to do this.
What do the Stamp Duty Changes mean?
The bottom line here is that buyers of properties in the UK will not have to pay any stamp duty if the value of the property is up to £500.000. This change comes into effect immediately and is really significant affecting about 90% of house buyers. The change is effective until 31 March 2021 when it will be reviewed.
There has been a great deal of pressure on the UK government to revisit the stamp duty rules. Bodies such as the National Federation for Builders and the Royal Institute for Chartered Surveyors were the largest proponents for change.
Good News for the Property Market
Professionals in the property market have really welcomed this change in stamp duty rules. Buyers in the South East of England will likely benefit the most from this cut. If you are a buyer looking to purchase a property between £400,000 and £500,000 then you are looking at saving around £15,000 with the elimination of stamp duty.
Buyers in London and the South East are more likely to be looking in this kind of price range for a property purchase as the house prices are the most expensive there. It is good news for the whole country too, as buyers will save a considerable amount whatever the purchase price.
The Housing Market will benefit overall
There is no doubt that the government were targeting first time buyers with this stamp duty cut but it is applicable to all. Some people will have been stalling on buying a new property because of the uncertainty with the pandemic but this change will give their confidence a boost and get them off the fence.
So is this good news for property investors as well? Yes it is. If you are purchasing a second property then you will also be entitled to a stamp duty holiday. Those investors that use limited companies to invest in properties will not have to pay stamp duty on homes up to £500,000 but they will have to pay the pre-existing surcharge of 3%.
Property investors will pay just 3% stamp duty on their purchases that are up to £500,000 rather than the previous 5% levels. If you want to invest in a property that has a value from £500,001 to £925,000 then the stamp duty rate is 8%. With higher value properties the rate increases to 13% and finally 15%.
We believe that several property investors that were playing the waiting game to see how the market would react to the coronavirus pandemic will now make the move with the stamp duty holiday in place.