Why Is this Stamp Duty Cut Significant?
Written on 9 July 2020
The Chancellor’s mini statement is clearly one of the most job focused statements we’ve seen in decades and I fervently hope this staves off the severe recession predicted by many.
With regards to the property market, the increase in the nil rate Stamp Duty Land Tax band to £500,000 is one of the most welcome changes seen for quite a long time. First-time buyers have enjoyed a version of this for a few years now, but the majority home movers in the UK aren’t first-time buyers. The £500,000 limit will encompass both first-time buyers and home movers – that’s likely to save an estimated 9/10 purchasers up to £15,000 and an average of £4,500. The savings buyers can make are also likely to then be spent on furnishings, decorating and home improvements. This can only benefit local economies and help protect jobs.
We expect that as a result of this change, we’ll continue to see the resilience the property market has demonstrated recently, over the next 6 months. It’s also worth noting that although predictions for unemployment have been at around 10%, this means 90% will still be in work and able to secure some form of mortgage lending.
Since the property market reopened in May, prices have held firm in many regions with the pent-up demand from earlier in the year propping things up. We expected this strength to continue for the next month or 2 without this stimulus, but now we think it will continue to Christmas and it’s possible we’ll see a strong property market all the way through to the end of March next year. Advice for sellers and buyers will be to get ready so you can move quickly, taking advantage of the current changes before they go.
There will be a knock-on effect for downsizers. Many people whose lifestyles have changed, resulting in the need for a smaller property or the need to release equity for retirement, have often chosen not to downsize due to Stamp Duty taxation. Therefore, this reduction in Stamp Duty should lighten that burden and will likely prompt a much-needed increase in property supply as many seek to take advantage.
First-time buyers - especially in London - may benefit as well if buying above £300,000 as the threshold is now £500,000, but they will have to move quickly as this is only until 31/03/21.
These changes are also available for people looking to buy second homes or buy-to-let properties in either personal name or as a limited company.
To check what Stamp Duty you’ll pay see our Stamp Duty Calculator.