In July 2020, Chancellor Rishi Sunak announced a temporary holiday on stamp-duty land tax (SDLT) for all residential properties worth less than £500,000. According to government figures, house sales rose 21.3% in September following the introduction of the tax reduction, and property prices reached a record high in October and in many areas they’ve continued to rise since!
Homeowners who want to take advantage of the stamp-duty holiday must act fast. Property experts are warning vendors that house sales are taking a month longer than usual to complete — the average time for a house to sell was already more than four months before COVID — because conveyancers and mortgage lenders are struggling to keep up with the surge in demand.
The original deadline was March 2021, but the holiday has been extended until September 2021 and whilst that may sound like some time away, if it takes five months to complete your sale — the stamp-duty reduction is only applied at the point of completion — time is running out for any homeowner who needs to sell their home to fund the purchase of a new one.
Why Has the Government Introduced a Stamp-Duty Holiday?
With COVID-19 wreaking havoc on the economy, the government has introduced a temporary reduction in SDLT to boost the housing market and help buyers who are experiencing financial difficulties due to the pandemic.
Stamp-duty holidays are not a new idea, and they have been implemented by governments throughout history. In December 1991, Chancellor Nigel Lawson increased the threshold to keep the housing market moving during a recession, and more recently in 2008, SDLT was waived for properties in the basic threshold due to the Credit Crunch.
Is Your House Sale Eligible for the Stamp-Duty Holiday?
The SDLT reduction applies to all residential properties purchased for less than £500,000 between July 8th 2020 and 30th June 2021 inclusive. Between 1 July 2021 and 30th September 2021 the holiday will only apply to properties less than £250,000. And then from 1st October the old rates will apply once again.
Buyers will pay no tax on eligible properties that sell for less than £500,000 and a gradually increasing amount on properties purchased for more than this figure. The fees payable on properties over £500,000 are not affected by the holiday. If you are buying an additional property, there is a 3% higher rate to pay. Government rates for different property types and second-home buyers can be found here.
The stamp-duty holiday only applies to houses purchased in England and Northern Ireland, as Scotland and Wales have their own property taxes.
How Much Can You Save with the Stamp-Duty Holiday?
SDLT increases as the sale price increases, therefore, the more expensive the property being purchased, the more you will save. The maximum amount a buyer could save is £15,000 — the amount usually payable on a £500,000 residential property.
Do I Have to Complete on a House Sale before the Deadline?
Yes. SDLT is payable within two weeks of completion. If your house sale is not completed before the deadline, you will be required to pay the normal fees.
Do House Sellers Benefit from the Stamp-Duty Holiday?
Stamp duty is paid by the buyer, so they will make the saving. However, when the SDLT had been waived or reduced previously, some homeowners adjusted their asking price to account for the fact that the buyer would not be paying stamp duty. In the current housing market, where demand is outstripping supply for popular properties, many homeowners may adopt this approach.
Finances aside, sellers will also benefit from having a larger pool of potential buyers and a quicker sale as interested parties rush to beat the deadline.
If you’ve found the perfect home and want to take advantage of the stamp-duty holiday, we can help you to sell your existing house fast. House Buyer Bureau has the funds to buy any type of property in any condition in England and Wales. There are no estate-agent or solicitor’s fees to pay, and we can complete the sale in as little as seven days, leaving you free to purchase your new home fast.