Stamp duty land tax (SDLT) is only one of many factors that influences decisions to buy or sell a home. However, today’s announcement of an immediate SDLT holiday from today until April 2021 on the first £500,000 paid for a main home in England or Northern Ireland should be greatly appreciated by people looking to move.
The maximum SDLT saving if buying a home costing £500,000 or more is £15,000. The chancellor stated that an average buyer would save £4,500 and that nine out of 10 buyers of their main home would pay no SDLT.
Buyers often pay the maximum amount they can afford, both the price for the house and the SDLT in total. Consequently, buyers not paying a percentage of the property’s value to the government as SDLT may have larger deposits and a better chance of securing a mortgage. Buyers may perceive they’re getting a better deal even if paying the same total amount. Also, the seller potentially benefits from receiving a higher amount from the buyer, and this may encourage more sellers to the market.
First time buyers, who may benefit from a SDLT exemption for properties below £300,000 and a partial relief on purchases up to £500,000, appear to lose their current competitive advantage. However, the existing 3% additional dwelling supplement for buyers of second homes, corporate buyers and other property investors will remain. Further, the additional 2% foreign buyers surcharge is still expected to be introduced from April 2021.
This SDLT holiday might directly boost the housing market and it may also have a positive impact indirectly on a long list of related industries such as house builders, conveyancers, estate agents, finance and insurance providers, house movers and furniture and garden retailers. This holiday could therefore have beneficial effects on many areas of the economy.
If you would like to discuss this further please get in touch with Jamie Ward or your usual PwC stamp taxes contact.
