Earlier this year, Chancellor Rishi Sunak postponed the stamp duty holiday. The extension implies that buyers in England and Northern Ireland would not have to pay stamp duties on the first £500,000 of property, provided they completed their payment before 30 June 2021.
Though stamp duty, which got introduced in July 2020, is coming to a close, you can still take advantage of the tax break available on the first £250,000 of a property purchase before the end of September.
This may be late but if you wish to save some money on stamp duty before the end of September? This article got you covered with all the details you need.
Can you still take advantage of the stamp duty?
Of course, you can still make savings out of stamp duty. Although, prepare yourself if you are planning to complete your purchase at the end of September because the stamp duty holiday will come to a close by then.
Completing the sales of a property takes an average of three months but now takes up to four months. We can trace this change to the sudden increase in the level of sales in the past year. So the chance of being able to do this is low but not impossible.
However, to speed up your purchase, you can buy your property through an auctioneer or stay in close contact with your conveyancer.
Zoopla estimated that over 50,000 buyers in England missed out on the maximum savings of the stamp duty as the full-time stamp duty holiday on the first £500,000 of a property purchase drew to a close at the end of June.
Why was the stamp duty holiday introduced?
Stamp duty holiday was introduced to support the UK property market by helping buyers whose finances were affected by Covid.
First-time buyers also have opportunities for stamp duty relief beyond the current stamp duty holiday. Regardless, the regular stamp duty rate will set in from 1 October 2021.
Why was the stamp duty holiday extended?
The stamp duty holiday was first announced in July 2020 by the chancellor when COVID-1 struck. The pandemic caused a decline in the property market but the tax break helped to give a new direction in the property space as buyers considered the purchase of mini-homes.
This led to high traffic in the buying of homes. Hence, securing a home took longer than usual. Besides, a petition receiving over 100,000 signatures encouraged a debate to be held in February to extend the stamp duty holiday.
Stamp duty rate from 1 October 2021.
Starting from 1 October, they will charge foreign investors 17% for their property purchase depending on the value and the number of homes they have bought before.
Stamp duty is determined by calculating the percentage of the property you purchase, and it applies to every form of property.
For existing homeowners the rates are:
0% up to £125000
2% on 125,0001 to £250,000
5% on 250,0001 to £92,5000
10% on 925,0001 to £1.5m
12% on any value above £1.5m
Although first-time buyers do not pay standard stamp duty on up to £300,000, they pay 5% on properties worth £300,000 – £500,000. Unless the property value is more than £500,000, they will have to pay the standard rate.
Homeowners who have more than one property will be charged 3% besides the standard stamp rate.
While for Non-UK residents, they are charged an extra 2% since April 2021 besides the original stamp duty plus a 3% charge rate if the investor owns a property prior to the new purchase.
Usually, you pay stamp duty within 14 days of completing your property purchase. This has been a money-saving initiative by the government, and for people who took advantage of it.
In conclusion, there are other types of schemes the government uses to support buyers you should consider if it is suitable for you. They include; help to buy, first homes, mortgage guarantee, and shared ownership.
Let me know if you found this information valuable or if you have any questions for me.