With VAT cuts, company bonuses and money off restaurants all part of last week’s government rollout of schemes to help boost the UK economy in the wake of coronavirus; the housing market did not go unnoticed. Chancellor of the Exchequer, Rishi Sunak, announced a temporary holiday on stamp duty on the first £500,000 of all property sales in England and Northern Ireland.
This is further good news for the property sector, which appears to have held up relatively well during the crisis – despite an initial drop in transactions. With the stamp duty holiday set to last until March 2021; the news has instilled markets and buyers affected by the pandemic with a rekindled optimism.
How much will buyers save?
From the 8th of July to the 31st of March – anyone completing on a main residence costing up to £500,000 will not pay any stamp duty, and more expensive properties will only be taxed on their value above that amount. This will save buyers as much as £15,000 – if they are purchasing a property of £500,000 or more.
This is likely to raise confidence in buying property during this uncertain time. While an undeniably great opportunity for homeowners – property investors have been urged to take advantage of Rishi Sunak’s stamp duty holiday by expanding their portfolios.
Will buy-to-let property and second homes be included?
Rishi Sunak’s announcement may have slightly disappointed buy-to-let landlords and anyone planning to buy a second home, as second-home buyers will still have to pay the 3% additional homes levy. This means that for purchases up to £500,000 the bill is 3%. The portion from £500,001 to £925,000 is charged at 8% and from £925,001 to £1.5m at 13%. Anything above £1.5m will be payable at 15%.
Analysis of the temporary tax rules by investment broker AJ Bell showed that for a purchase of a home worth £300,000, that is not a main residence which includes second homes and investment purchases – the stamp duty bill would be £9,000 instead of £14,000. This is because the three per cent surcharge on second homes is still applicable, but normal stamp duty rates do not apply.
Property investors who purchase through limited companies will also be exempt up to £500,000. For a property costing £350,000, landlords will save £7,500, reducing the tax bill from £18,000 to £10,500. Buy-to-let broker Mortgages for Business has recommended for investors to buy quickly before the likes of second steppers are able to do the same.
Seeing as Britain is already viewed as an international “safe haven” for property investment – with buyers from across the globe purchasing real estate in the country; the stamp duty is likely to further incentivise transactions. Thus, the latest government policy will benefit sellers as much as buyers, as they will be able to take advantage of increased demand and raise prices.
Assets for sale
According to a recent report by Savills – while a short-term dip for the property sector is on the cards; recovery is expected to swiftly follow. The firm made this prediction prior to the stamp duty holiday announcement, therefore it is likely that the outlook would be even more positive now.
If you’re looking to use this opportunity to expand your portfolio; we currently have a variety of great assets for sale – including several beautiful properties at Royal Tunbridge Wells’ iconic colonnade; The Pantiles. For more information – click here.