When Does The Stamp Duty Holiday End And What Does This Mean For Potential Homeowners?

Throughout the pandemic, the stamp duty holiday, a government help scheme implemented during last year’s lockdowns, has been of great benefit to the property market. The stamp duty holiday has given the housing market a boost and helped many buy their homes during this uncertain time.

 

Though the housing market has continued to be open throughout the coronavirus pandemic of the last year, the latest step on the government’s roadmap out of lockdown on 17 May 2021 has made the buying and selling process might feel safer for many, due to the success of the vaccine rollout, and that people are allowed to mix indoors socially.

 

With the uncertainty starting to clear, and the stamp duty holiday deadline fast approaching, in this blog, we will explain what the stamp duty holiday is, when it will end, and what this means for potential homeowners.

 

If you are looking to take the next step by either seeking mortgage advice as a first-time buyer and getting onto the property ladder for the first time, or by selling your home and purchasing a new property, get in touch with your local JonSimon Estate Agents branch today at Radcliffe, Ramsbottom or Burnley. We are here to answer all your questions about stamp duty, and how we can help you to secure your dream home and navigate the housing market before the stamp duty holiday deadline.

 

What is stamp duty?

Stamp duty is a tax that you are required to pay in England or Northern Ireland upon purchasing a residential property or piece of land over a certain price. In other words, it is a tax paid when you buy a house.

In England and Northern Ireland, stamp duty on your residential property purchase is referred to as Stamp Duty Land Tax, or SDLT. The Scottish government equivalent is the Land and Buildings Transaction Tax (LBTT), or the Land Transaction Tax (LTT) if with the Welsh government.

 

What is the stamp duty holiday and when does it end?

In July 2020, amidst the coronavirus pandemic in the UK, the level at which stamp duty started having to be paid was raised from £125,000 to £500,000. This adjustment was temporarily instated in order to give the property market a boost and help buyers whose finances were affected by the COVID-19 lockdowns. The tax break, known as the stamp duty holiday, means that buyers could potentially save up to £15,000 in tax if they move before the deadline.

 

These stamp duty rates are applicable for those who are purchasing their first property, as in it is the only one that they own. In this case, it is advantageous for first-time buyers to make good use of the stamp duty holiday whilst it lasts and get on the property ladder as soon as possible.

 

However, second-home buyers and landlords can also benefit from the stamp duty holiday and its reduced rates. For those with additional houses, an additional 3% of stamp duty is added on top of the standard relevant rate.

 

According to Which?, the stamp duty holiday has caused a significant rise in the number of houses being sold since the tax cut came into force. They report that provisional HM Revenue and Customs (HMRC) data shows 190,980 sales in March 2021, doubling the figures from last year, and up 32% from February 2021.

This spike is likely due to the fact that the stamp duty holiday was originally supposed to end on 31st March 2021. However, this has been extended throughout the UK and is now due to end on 30th June 2021. After 30 June, the rate will increase at a staggered rate for a smooth transition, returning to the previous stamp duty rate by October.

 

As the stamp duty holiday has caused a rise in demand in the housing market, in turn, this has caused a rise in house prices. In February, the average price of a home rose by 0.7% to £231,068 which is the highest on record.

 

Not only this, but the shift to working from home during the pandemic has caused a change in what people are looking for in a property. As there has been less commuting and much more time at home, which is expected to continue in some shape or form throughout this year,  more Britons are moving out of big cities to smaller towns or more rural areas, in search of bigger houses, home offices, gardens and greener surroundings.

 

How do I calculate stamp duty during the stamp duty holiday?

If you are unsure about the stamp duty rates around the time of your purchase, there are many tools you might use to calculate stamp duty, including the government’s Stamp Duty Land Tax Calculator. You can also find the standard stamp duty rates listed below.

Up until 30th June 2021, if you purchase a residential property, you can calculate stamp duty as follows:

Up to £500,000 – 0%

£500,001 to £925,000 – 5%

£925,001 to £1.5 million – 10%

Above £1.5 million – 12%

 

What happens after 30th June?

From 1 July 2021 until 30 September 2021, you can calculate stamp duty similarly, except you start paying stamp duty on any property above £250,000:

Up to £250,000 – 0%

£250,001 to £925,000 – 5%

£925,001 to £1.5 million – 10%

Above £1.5 million – 12%

 

After that, on 1 October 2021, stamp duty rates will return to normal, and so will only be due on properties over £125,000, marking the end of the stamp duty holiday:

Up to £125,000 – 0%

£125,001 to £925,000 – 5%

£925,001 to £1.5 million – 10%

Above £1.5 million – 12%

Also being reinstated from July 2021 is the first-time buyers’ scheme, one of the government help schemes which allows first-time buyers stamp duty relief on properties under £500,000. According to the Government’s official website, this relief was only “disapplied due to the introduction of temporarily reduced rates for residential property” through which first time buyers were to use the reduced rates.

 

With all this in mind, now is the perfect time to get on the property ladder, by taking advantage of these government help schemes before it is too late. Remember, though the stamp duty holiday might end on the 30th June 2021, there will still be reduced stamp duty rates all the way through until the end of September.

 

If you are ready to take advantage of the stamp duty holiday, get in touch with JonSimon today to get your property before the deadline

 

Whether you are a first-time buyer, wanting to sell your home and buy a new property, or perhaps you want a second property and to become a landlord, the estate agents at JonSimon are here to help.

 

So, if you are looking to purchase a property before the stamp duty holiday deadline, get in touch with your nearest branch, in Radcliffe, Ramsbottom or Burnley to find out more, and begin the journey towards buying your dream home.

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