A chance to hear the latest on employment, property, corporate and restructuring and insolvency and to ask questions and share your opinions.
DATE: Thursday 7 May 2020, 10:00am - 11:00am- delivered via Zoom Video Conference
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The Stamp Duty Land Tax (‘SDLT’) holiday was announced on 8th July 2020 to rejuvenate the property market. The holiday applies to residential property transactions by way of an increase in the first SDLT threshold from £125,000 to £500,000.
As this is the only holiday that some of us will experience this year, we have summarised the effect that the SDLT holiday may have on home movers, first-time buyers and property developers/ buy-to-let investors.
The home mover
As previously stated, the holiday increases the SDLT payment threshold on all residential purchases from £125,000 to £500,000 if completion takes place between 8 July 2020 and 31 March 2021. The holiday may encourage homeowners to upsize and downsize dependant on their needs with the incentive being a maximum potential saving of £15,000.
The aim of the SDLT holiday is to increase the fluidity of the housing market and ultimately boost the economy during the COVID-19 pandemic, because a strong property market can create consumer confidence in other markets and boost economy-wide consumer expenditure.
Warning: the SDLT holiday does not apply to non-residential and mixed-use properties. Therefore, if you are planning on buying a property and just one room will be used for a non-residential purpose, you will not benefit from the increased SDLT threshold.
The first-time buyer
The holiday is not as beneficial for first-time buyers. Previously, first time-buyers paid 0% SDLT on the first £300,000 of their purchase, 5% on the amount between £301,000 and £500,000 and full taxation rules on the amount above £500,000.
Although the holiday will mean that first-time buyers do not have to pay the 5%, most leading lenders removed their 90% to 95% loan-to-value mortgage products in June 2020, meaning that first time buyers can only buy with a deposit of at least 15% in most cases.
Alongside the fact that the majority of first-time buyers were already exempt from SDLT as the average price paid for a first home in England is £220,000, the holiday does not provide much of an incentive for first time buyers.
Developers and buy-to-let investors
Although the SDLT holiday does not directly benefit housing developers, the hopeful rise in property purchases could create a need for new housing developments.
In England and Northern Ireland, landlords and individuals buying additional properties will still need to pay the 3% surcharge. Previously, a person buying an additional property of £500,000 would have had to pay 3% on the first £125,000, 5% on the next £125,000 and 7% on the remaining £250,000. This would result in an SDLT liability of £30,000. The SDLT holiday allows people buying additional properties to pay 3% on the whole £500,000 purchase, meaning that the SDLT liability would be £15,000, resulting in a saving of £15,000.
If you are interested in buying or selling a property, please call us on 01242 574244 and ask to speak to a member of our residential/ commercial conveyancing departments.
A chance to hear the latest on employment, property, corporate and restructuring and insolvency and to ask questions and share your opinions.
DATE: Thursday 7 May 2020, 10:00am - 11:00am- delivered via Zoom Video Conference
Cheltenham based solicitors, Hughes Paddison, have announced two promotions within their Senior Management Team. Jon Rathbone has been made an Equity Director within the firm, whilst Julie Bennett has been made a Director.
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