The threshold on Stamp Duty Land Tax has been raised to £500,000, saving home movers and first-time buyers an average £4,500 on a property transaction.
Rishi Sunak, Chancellor of the Exchequer, made the announcement of the temporary cut in the property tax in England in his summer statement in the House of Commons.
The cut is effective immediately and will stay in place until March 31, 2021.
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Raising the threshold at which stamp duty is paid on property transactions from £125,000 to £500,000 will cut the cost of buying for thousands of home movers and first-time buyers.
9 out of 10 buyers won't pay stamp duty now
Speaking to MPs, Mr Sunak said: “Nearly nine out of 10 people buying a main home this year will pay no stamp duty at all.”
The stamp duty cut is part of a package of measures announced by the Chancellor to restart the UK economy after more than three months' lockdown because of the coronavirus pandemic.
First-time buyers already have a higher stamp duty threshold, paying no property tax on transactions up to £300,000.
However, increasing the threshold for everyone to £500,000 is seen as an effective way to encourage more people to get on to the property market, knowing they will save thousands on their move.
Supporting the property sector
According to the Treasury, the temporary increase in the threshold will “drive and support jobs across the housebuilding and property sectors”.
With the UK slowly emerging from lockdown, this fantastic news on stamp duty will help to kickstart the property industry as buyers and sellers feel more confident about committing to a sale or purchase.
Mr Sunak's announcement only affects home buyers in England and Northern Ireland. Devolution means Scotland and Wales have their own stamp duty regime, and any changes to the thresholds there would have to be announced by their respective First Ministers.
More certainty for buyers and sellers
Will Herbertson of Homeward Legal welcomed the news on stamp duty from the Chancellor, saying: “The last few months have been very uncertain for buyers and sellers as we slowly return to more normal circumstances.
“Today's news on the rise in the stamp duty threshold is a very welcome boost to the property sector. This will collectively save home buyers millions of pounds and give them certainty and security in making an offer on the home they want.
“Knowing buyers have more cash in their pockets will also give sellers greater confidence in marketing their property.
“Our team at Homeward Legal are looking forward to helping more home movers and first-time buyers with our market-leading conveyancing services.”
Tax holiday will boost property market
Estate agents have also welcomed what is effectively a stamp duty holiday for the next nine months.
Mark Peck, head of residential at estate agent Cheffins, told the Guardian: “Whilst the market has already been significantly busy post-lockdown, cutting stamp duty on purchases up to £500,000 really will be the catalyst to get the industry flying.
“The most likely impact of this measure will be a flood of buyers coming into the market who previously had sat on their hands due to political and economic uncertainty, and this flurry of activity will bring with it prices rises as demand outweighs supply.
“However, it will also be a stimulant for those considering selling as people look to make the most of a buoyant market during the tax holiday.”
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