In his summer statement, the chancellor, Rishi Sunak announced a stamp duty holiday on property transactions of under £500,000, which complete before 31 March next year. The zero rate is also payable on the first £500,000 of more expensive properties.
The news has led to a flurry of interest in the housing market, with some estate agents reporting that enquiries have “gone through the roof”.
If the change is making you think about a house move, you might be wondering how much it could save you in real terms.
According to the latest Land Registry figures, the average sold price of a London home is £485,527. Before the chancellor’s announcement, anyone buying at this price would have needed to pay £14,276 in stamp duty within 14 days of completing.
Property portal Rightmove, however, puts the average London asking price for June at £628,000. This takes the buyer over the £500,000 threshold; however, the stamp duty holiday means they would only pay the tax on £128,000 at a rate of 5% – equal to £6,400. This represents a £15,000 saving on the £21,400 they would have paid before the announcement.
People buying second homes will need to pay the 3% stamp duty surcharge for additional properties. However, they are allowed to take advantage of the stamp duty holiday on the main charge, meaning their property purchase will still be cheaper. This could be a big advantage to anyone contemplating buy-to-let, who was previously put off by high stamp duty charges.
March 31 is also a significant date for overseas buyers, as from April 2021, non-UK residents buying in England and Northern Ireland will have to pay a 2% surcharge on top of any stamp duty owed for their purchase.
If you have a property in mind, find out how much stamp duty you will pay using the government’s calculator tool here.
Read more about this story in the Evening Standard, Homes & Property.