Sunak saves the day for thousands of home buyers

For the past few months any conversation relating to the property market has been dominated by the SDLT (Stamp Duty Land Tax) holiday which had been scheduled to come to an abrupt end on 31 March.

What is the SDLT holday? 

The holiday was announced in July 2020 and means that no SDLT is payable for the first 500,000 of a propert’y purchase price until 30th June, and no SDLT payable for the first £250,000 of a purchase price between 1st July and 30th September.

This can mean a saving of up to £15,000 if the purchase completed on or before 30th June 2021.

The Chancellor has now finally announced that the stamp duty holiday has been extended.  ‘Normal’ rates of stamp duty will not return until 1^st October 2021.

Currently, stamp duty is not payable on properties up to £500,000, and this will now continue until 30^th June.  After this date the nil-rate band will be lowered to £250,000 until 30^th September.  From 1^st October normal rates will resume and stamp duty becomes payable on any property over £125,000.

In Cheshire, where the majority of sales are semi-detached properties with an average sale price of £229,421 (according to Rightmove), many home buyers will have a further six months in which to complete, and either avoid paying stamp duty completely, or benefit from a reduction.

Average house prices in Cheshire

• Overall average: £273,616
• Average terraced: £175,40
• Average semi-detached: £229 ,421
• Average detached: £411, 625

*according to Rightmove.co.uk

For example, a £400,000 purchase of a main home would normally be subject to a £10,000 SDLT payment.  Up until 30 June, that liability will be zero.  After June, and until 30 September 2021, the payment would be reduced to £7,500 – a saving of £2,500 on the ‘normal’ land tax.

The stamp duty holiday extension means that hundreds of thousands of transactions that had previously been in jeopardy if any party in the chain withdrew because the transaction could not complete by 31 March now have a lifeline.

Over the past six months, transactions have taken longer to complete as the increased demand which has been generated due to the SDLT holiday has combined with current national lockdown. Many professionals and organisations have been working remotely which can create delays simply due to having to work in a different way.  In addition, if any party in the chain becomes ill or displays symptoms and need to isolate this can delay moves.  And natural concern for job security has made it more difficult for some buyers to secure, and keep, mortgage offers.

But the new deadlines extend beyond the dates planned for easing of lockdown restrictions.  At Poole Alcock we are hugely optimistic that this will result in an exciting year for the property market, and anyone wishing to move house.  As we head into summer and the lockdown restrictions are lifted, the conveyancing process will be able to speed up and we will make every effort to ensure that as many buyers as possible can take advantage of the reduced taxes.

To calculate your potential stamp duty liability on any given completion date, visit this page.

If you are moving home and wish to discuss the impact of the Stamp Duty holiday on your purchase, or are looking for stamp duty land tax advice please get in touch with us today.