The government has imposed a stamp duty holiday that will run until 31st of March 2021. This means anyone buying a property up to the value of £500,00, between now and the end of March next year, will not have to pay a penny in stamp duty.
Before Rishi Sunak revealed the stamp duty holiday on the 8th of July, stamp duty had to be paid on all homes that sold for £125,000 or more. For first-time buyers, this threshold was set at £300,000.
The Chancellor revealed that the holiday will mean zero stamp duty is paid on properties under £500,000. This means that 90% of buyers will pay nothing in stamp duty over the next nine months. However, this only applies to properties in England and Northern Ireland. The Scottish and Welsh governments are responsible for any property levies in their respective countries.
What is stamp duty?
Everyone who buys a property or land costing over a certain amount must pay stamp duty – a one-off tax. How much stamp duty you pay is determined by whether the property is commercial or residential and how much it sold for. Before the holiday was imposed, stamp duty rates were as follows:
- Up to £125,000, stamp duty is zero
- £125,001 to £250,000, stamp duty is 2%
- £250,001 to £925,000, stamp duty is 5%
- £925,001 to £1.5 million, stamp duty is 10%
- Above £1.5 million, stamp duty is 12%
The charge is staggered, so on a home worth £500,000 the first £125,000 is stamp duty free, the next £125,000 is taxed at 2% and the final £250,000 is taxed at 5%. This would mean £15,000 would have to be paid in stamp duty.
Whether or not this will remain the same when the stamp duty holiday ends in March of next year remains to be discussed.
Should I buy a new house now?
With the government determined to keep the economy moving, if you have been toying with the idea of moving house now might be a perfect time.
Lockdown prevented vast numbers of people from putting their properties on the market and halted the progress of homes that were already for sale. Therefore, there is an influx of homes on the market, meaning you could have the pick of a much wider pool. However, it is worth remembering that the stamp duty holiday will also encourage many more buyers who are looking to capitalise on the stamp duty saving to start shopping around too.
Logistically, with estate agents now open and operating under their ‘new normal’ guidelines there is no reason why you cannot buy a new house. Viewings can take place via video or in person, as long as social distancing is maintained. Furthermore, paperwork can be completed electronically, and all high street estate agent premises have Covid-19 regulations in place, such as clear protective screens and hand sanitiser, should a face to face meeting be needed.
One thing to remember is that stamp duty is only exempt on the first £500,000 on the sale price of a property. Buyers will still have to pay stamp duty on any amount exceeding the £500,000 threshold. The stamp duty due is now as follows:
- Up to £500,000, stamp duty is zero
- £500,0001 to £925,000, stamp duty Is 5%
- £925,0001 to £1.5 millon, stamp duty is 10%
- £1.5 million and over, stamp duty is 12%
For example, if you purchased a property for £600,000 today you would fall into the 5% category and would pay £5,000 in stamp duty even during the holiday period. Whilst the stamp duty holiday rules may seem unfair to those purchasing higher value properties it is a welcome tax relief for those buying homes under the £500,000 limit.
Can I move house now?
With lockdown restrictions having been eased, moving house can now take place. At Britannia Movers, we have adjusted our removals service to accommodate new measures and procedures in light of Covid-19 for the safeguarding of our customers and staff.
Our new measures are in keeping with government guidelines and advice from the British Associate of Removers. Some of these measures include:
- Crew members will adopt social distancing, remaining 1m+ away at all times
- All crew members will be wearing appropriate PPE
- We ask just one household member to be present on the day of the move
- If this is not possible the crew will ask the residents to remain in one location whilst they pack and remove items out of the property
- Crew will need access to a designated bathroom to wash their hands regularly
- Upon completion the crew will ask the customer to verbally relay that they are satisfied and the move is complete, they will sign the checklist on the customer’s behalf when they express they are happy
- A copy of the checklist will be emailed to every customer for their records