The governments of England and Northern Ireland, Wales and Scotland have issued temporary Stamp Duty changes to encourage movement in the housing market that has stagnated during the Covid pandemic.
Stamp Duty rules differ between England and Northern Ireland, and the devolved Scotland and Wales.
In England and Northern Ireland, the threshold at which Stamp Duty Land Tax is payable on property purchases has been increased from £125,000 to £500,000. Buyers of property valued at more than £500,000 will still benefit, but only up to the £500,000 limit.
The rules in England and Northern Ireland came into effect for house transactions completed between Wednesday 8th July and 31st March 2021. It is estimated that almost 90% of home buyers will pay little or no Stamp Duty during the period.
Landlords and buyers of second homes in England and Northern Ireland will also benefit from the discount, but will still pay the additional 3% Stamp Duty under the previous rules.
Those buying a property through shared ownership will usually pay Stamp Duty on the percentage of the property they own, paying more as they increase their share of the property (known as ‘staircasing’). However, they can still benefit from the whole Stamp Duty ‘holiday’ if they choose to pay Stamp Duty on the whole property up-front and in full.
In Scotland, the equivalent Land and Buildings Transaction Tax (LBTT) will rise from £145,000 to £250,000 and come into effect on 15th July and continue until 31st March 2021. In Scotland, the threshold will not be increased for property purchases of second homes. The discount will mean that 80% of buyers of homes purchased in Scotland will pay no LBTT.
In Wales, Land Transaction Tax is payable on property over £180,000 which is higher than the £161,719 average price of property in Wales. There were concerns that the discount across the boarder in England may have lured house buyers from Monmouthshire, where the average property price is over £275,000. Unless an adjustment was made to LTT, buying a similar property on the boarder in England as opposed to Wales might have resulted in savings of over £15,000.
Plans to increase the Land Transaction Tax threshold in Wales were announced on 15th July, much later than the rest of the UK, and will apply between 27th July and 31st March 2021. During this period, no LTT will be payable on properties up to £250,000, but homebuyers of more expensive properties and second homes or buy to let properties will not be eligible for the exemption.
Many homebuyers have welcomed the Stamp Duty holiday but those who completed during the lockdown, effectively preventing the housing market from reaching a complete halt, will receive no benefit. Calls have been made to backdate the discounts to encompass those who have paid since the lockdown began.
If you’re buying property a Chartered Surveyor will overlook the condition and structural elements of your new property to help you safeguard your investment.