Since Covid-19 lockdown restrictions have eased in the UK, and moving house is possible again, the property market appears to be tentatively finding its feet.
However, according to Chancellor Rishi Sunak, property buying and selling fell by 50% in May. Sunak believes he has a way to help people proceed more confidently.
On Wednesday 8 July, he revealed that stamp duty will be abolished, effective immediately, on homes worth up to £500,000. The cut will last until 31 March 2021.
What is stamp duty?
Stamp Duty Land Tax is the levy buyers must pay to HM Revenue & Customs when buying a property. It’s one of the major costs buyers factor in when budgeting for a new home.
It applies for properties priced at more than £125,000, unless it is a second home. The exact rate the buyer pays is dependent on a couple of factors including where the property is in the UK, the purchase price of the property and whether or not it is the only property the buyer owns.
There are many helpful stamp duty calculators available online such as at MoneySavingExpert.
What does this mean for buyers?
The average stamp duty bill will fall by £4,500 according to Sunak.
Head of UK residential research at Knight Frank, Tom Bill said: “A stamp duty holiday [will] provide welcome financial relief for millions of people, including first-time buyers. The government understands that moving house has far-reaching benefits for the UK economy and this may form part of a wider re-think of property taxation that recognises this strategically important role.”
Putting it into effect immediately prevents buyers from putting plans on hold, which could have stalled the momentum of the reawakening market.
Concerns for property developers
While unveiling this stamp duty cut, Sunak stated that house building supports nearly 750,000 jobs. And so this should be good news for many. There are concerns, however, that eight months will not be enough time.
Jason Honeyman, Bellway’s chief executive, said: “Any help is positive but developers need longer term solutions to provide the confidence to invest. Developments often take several years in the making so [an 8] month fix is unlikely to have an effect on our investment plans.”