THE Government’s stamp duty tax relief has been extended until September, the Chancellor announced in the Budget.
The temporary stamp duty holiday for homes worth up to £500,000 was due to expire on March 31, but have been extended by three months until June.
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From July, the tax-free threshold will drop for home buyers to £250,000 until September, and then return to its normal limit at £125,000 from October.
Mr Sunak told the House of Commons: “I can announce today the £500,000 nil rate band will not end on 31st of March, it will end on June 30.
“Then, to smooth the transition back to normal, the nil rate band will be £250,000, double its standard level, until the end of September – and we will only return to the usual level of £125,000 from October 1.”
The rates apply to home buyers in England and Northern Ireland only, as they differ for those buying homes in Scotland and Wales.
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It means buyers would pay no stamp duty on a £500,000 home if they completed on the sale today.
But between July and September, they would have to pay £12,500 and £15,000 from October, according to property platform twindig.
Mr Sunak also announced a mortgage guarantee scheme, in which the government will underwrite mortgages for homebuyers with five per cent deposits.
He said: “I’m pleased to say that several of the country’s largest lenders including Lloyds, NatWest, Santander, Barclays and HSBC will be offering these 95% mortgages from next month, and I know more, including Virgin Money will follow shortly after.
“A policy that gives people who can’t afford a big deposit the chance to buy their own home. As the Prime Minister has said, we want to turn generation rent into generation buy.”
The temporary holiday was introduced to get the property market moving again following the coronavirus crisis.
However, many people have been left scrambling to complete their transactions before the deadline, worried that if they don’t, they could be left with a hefty tax bill.
What is stamp duty?
STAMP duty land tax (SDLT) is a lump sum payment anyone buying a property or piece of land over a certain price has to pay.
Up until July 8, 2020, most house-buyers in England and Northern Ireland had to pay stamp duty on properties over £125,000.
This was temporarily increased to £500,000 until March 31, 2021 in the government’s mini-Budget in July 2020 – but has now been extended.
The rate a buyer has to fork out varies depending on the price and type of property.
ates are different depending on whether it is residential, a second home or buy-to-let, or whether you’re a first-time buyer.
The usual system in England for residential properties means:
- First-time buyers pay nothing on properties below £300,000 (and relief available on properties of up to £500,000)
- You pay nothing if the property costs below £125,000
- You pay 2% if it is worth between £125,001 and £250,000
- You pay 5% if between £250,001 and up to £925,000
- You pay 10% if it is between £925,001 and £1.5million
- You pay 12% on anything over £1.5million
For second homes or buy to let properties:
- 3% on purchases up to 125,000
- 5% on purchases between £125,001 and £250,000
- 8% on purchases above £250,001 and £925,000
- 13% on purchases above £925,001 and £1.5 million
- 15% on purchases above £1.5 million
In December, an industry expert also warned a third of a house sales could fall through if it wasn’t extended.
The usual stamp duty rates when there is not a holiday mean first-time buyers are exempt from paying stamp duty on the first £300,000 on properties worth up to £500,000.
The normal rates are also different if it’s a second home or buy-to-let property, with an additional three per cent on top of standard stamp duty rates.
We’ve rounded up all the rates above.
If a first-time buyer bought a property for £500,000, they’d save £10,000 in stamp duty thanks to the holiday.
Meanwhile, home movers who bought the average property for £248,000 would save £2,460 on stamp duty.
And Brits buying a second home for the average price tag would save a whopping £9,900.
The government has a handy calculator so you can work out how much you would pay on a property.
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Although the nine-month stamp duty holiday may have sparked a mini-boom in the housing market, it has cost taxpayers an estimated £3.3billion.
Lockdown measures and pent-up demand for houses has caused the time it takes to buy a property to double, according to mortgage broker Trussle.
At the same time, a recent report by the Centre for Policy Studies (CPS) said the tax break had increased house sales to their highest level since before the 2007 financial crisis.
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