On 8th July 2020, the UK Chancellor Rishi Sunak made an announcement regarding various changes to the UK economy for the near future. As estate agents in Chichester, one of the most important aspects of his Summer Statement was naturally the changes to stamp duty regulations. These changes make a huge difference to both people interested in buying a new property and also those who are trying to sell. Here at Hancock and Partners, we have put together a guide on everything you need to know about stamp duty and the changes that have been made from the 8th July 2020.
What are the stamp duty changes?
When you are looking to purchase a property or a piece of land in England and Northern Ireland, stamp duty is a tax you may have to pay. In Wales it is known as Land Transaction Tax (LTT) and in Scotland it’s Land and Buildings Transaction Tax (LBTT). It is a banded tax relating to the overall cost of a property, and before 8th July 2020, the threshold for SDLT was £125,000 for residential properties, £150,000 for non-residential properties and land, and £300,000 for first-time buyers. The government says the temporary tax break means almost nine out of ten people buying a property will pay no stamp duty at all.
If you are looking to purchase a property from 8th July 2020, until 31st March 2021, Sunak has abolished stamp duty on homes worth up to £500,000, with the change coming into effect immediately. This will apply whether you’re a first-time buyer or have previously owned a property. However, if you are looking to buy a second home, you will still have to pay 3% stamp duty on a property costing more than £40,000, up to £500,000.
New Stamp Duty rates:
Property Value SDLT Rate
Up to £500,000 0%
£500,001 to £925,000 5%
£925,001 to £1,500,000 10%
Above £1,500,000 12%
Stamp duty for first time buyers
To count as a first-time buyer, all parties must have never owned their own home in the UK or abroad, including homes that have been inherited, and have the intention to live at the property address. However, if you are not married but living with a partner who has owned a property previously, and you have not, you will be considered a first-time buyer. In normal circumstances, as a buyer you would not pay any stamp duty up to the first £300,000 of the property’s value and a 5% charge will apply on anything above the £300,000 mark. If a first-time buyer now decides to purchase a property for £500,000, the new system could allow them to save £10,000 on stamp duty, compared to the previous rate.
Why is now the best time to buy or sell a property?
When purchasing a home, many buyers are put off by the potential stamp duty tax they would have to face. However, this holiday is going to encourage more buyers to buy or move home, especially in property areas like London and the South East where stamp duty costs are high.
In the local Chichester District, there are a number of areas which may be worth looking at for properties under £500,000. Even if you see a property just over this threshold, it might be worth making an offer, as you do have the option to negotiate with the sellers. For example, Summersdale is a wonderful local area which is just north of Chichester city centre, close enough to bars, restaurants and shops while being on the doorstep of the South Downs. If you are looking to take advantage of the stamp duty savings, bear in mind there will be increased competition, so our advice is to make sensible offers promptly and ensure you have a mortgage in place so that you can act as soon as an offer is accepted.
Whilst the financial benefits are obvious for buyers, there are also numerous advantages for those who are selling their property during this stamp duty holiday period. It is already evident since the change, that there is more interest in the property market and many will be looking to purchase as soon as possible so they can take advantage of this tax break. Due to the stamp duty savings available to buyers, they may also be less inclined to negotiate an offer below the asking price in their keenness to secure the right property during the SDLT tax holiday. Budgets may be higher as buyers will pay less SDLT, which is undeniably an excellent scenario for sellers, so it is the perfect time to buy or sell a property.
Would you like to buy or sell a property?
Following the Chancellor’s announcement on stamp duty, you may now feel that this is the ideal time to purchase or sell a property in your local area. We established Hancock and Partners back in 1991, so we have a wealth of knowledge in the local property market and can assist you in securing the best outcome for you and your household. We understand that you may be looking to buy or sell quickly due to the new stamp duty changes, so we are here to support you and work with you to provide a completely tailored service.
If you would like to get in touch with our friendly Sales Director, Jonny Crow, or another member of the Hancock and Partners team, please feel free to give us a call on 01243 531155, and we would be happy to assist you.