Nobody can have failed to have missed the headlines in the newspapers and on the radio, that the Chancellor, Rishi Sunak, has given the property market a ‘Stamp Duty holiday’!
Everybody loves a holiday, but the truth is with holidays they are soon over and you are back to work and the harsh reality of life.
As from the date of the announcement, Wednesday 8th July, 2020, the Stamp Duty holiday is in place and extends to the 31st March, 2021.
A Stamp Duty holiday means that the government have increased the nil rate band of residential Stamp Duty land tax in England and Northern Ireland from £125,000 to £500,000. The clear aim of this is to help boost the housing market and in turn the wider economy to help speed the economic recovery from the Coronavirus/Covid-19 global pandemic lockdown.
The lockdown commenced in the UK on the 23rd March, 2020, and theoretically saw the property market closed for business, March/April/May with the lockdown, and effectively closed for business until such time as the government allowed offices to reopen as from the 1st June, 2020.
Everybody loves a holiday and everybody tries to do as much as they possibly can while they are on holiday. This is no different for the property market to take full advantage of the Stamp Duty holiday, and full advantage of Stamp Duty savings, sellers and buyers alike are being encouraged to move or sell rather than wait.
Central government critics are worried that the return to normal Stamp Duty, that resumes on the 1st April, 2021, will see a slowdown in the property market as the ‘new normal’, an expression that we have all come to utilise, is the fact that Stamp Duty is paid.
The majority of housing transactions in the East Yorkshire area are sub-£500,000 so each and every transaction should see a saving between £2,500 to £15,000 for each purchaser buying. The knock-on effect also benefits sales transactions over £500,000 because the Chancellor has made the first £500,000 exempt in each and every sales transaction, rather than an exemption up to £500,000. So, for those purchasers of larger properties, say in the region of £750,000 instead being subject to a Stamp Duty bill of £27,500 there is a £15,000 saving so the Stamp Duty bill is only £12,500.
Statistics are out there that prove that most property transactions throughout the country are executed below the £500,000 threshold, and only some 15% of all transactions annually are committed above £500,000 and beyond.
So, the message is loud and clear, enjoy the holiday, take full advantage of it, and like every holiday it will come to an end and there is a return to normality, but enjoy it and make the most of it while you can.
Our offices are noticing positive response to the announcement in an East Yorkshire property market that still remains buyer led with a shortage of properties coming to the market. Each seller is potentially a buyer, and each buyer can take advantage of the Stamp Duty holiday. The encouragement should now be aimed at sellers to become buyers to take advantage of this introduction while it lasts.