Stamp Duty Changes: what do they mean for you?

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Today (Wednesday 8^th July), the Chancellor has announced a temporary Stamp Duty Land Tax (“SDLT”) holiday on residential properties as part of a number of measures that aim to kick start the economy following the impact of COVID-19.

The minimum threshold has been increased with immediate effect to £500,000.00 until 31 March 2021 in an attempt to boost the housing market. The measure is anticipated to save every homebuyer between now and 31 March 2021, on average, £4,500 on SDLT. It is also expected that 9 out of 10 people buying a home will pay no SDLT at all.

Currently, those replacing their main home do not have to pay SDLT on the first £125,000 of the purchase price. The residential SDLT thresholds are:

2% on properties costing £125,001 to £250,000;
5% on £250,001 to £925,000;
10% on £925,001 to £1.5 million; and
12% on any value above £1.5 million.

First time buyers who benefit from first time buyers relief, whereby SDLT is not payable on the first £300,000 of the purchase price, but 5% on the portion between £300,001 to £500,000, will also benefit from the SDLT holiday.

Therefore, the residential SDLT thresholds as of today to and including 31 March 2021 will be:

5% on properties costing £500,001 to £925,000;
10% on £925,001 to £1.5 million; and
12% on any value above £1.5 million.

The SDLT holiday also applies to purchases of additional properties. However the 3% surcharge remains at the following rates:

3% on properties costing up to £500,000;
8% on £500,001 to £925,000;
13% on £925,001 to £1.5 million; and
15% on any value above £1.5 million

So what does this mean for businesses within the property industry as well as those looking to sell or buy their home?

For those in the property industry, the news provides a further demand for housing. With the future of office and shop spaces changing drastically, commercial conversions will become increasingly popular for developers and investors. Together with the radical reforms to our planning system set to come in force from September, businesses directly involved with the building and selling of properties should expect a busy year with quick turnarounds.

For anyone looking to replace their main home, the money that would have been spent on paying the SDLT due on their property provides opportunities to spend more on home improvements which, in turn, will help boost the economy.

However, this may not be welcome news to those who have sped up their house purchase during the Covid-19 crisis as there does not appear to be any proposal to backdate the SDLT holiday.