What is the stamp duty holiday?
Stamp duty is a tax which applies to property purchases. The government has frequently introduced various changes to stamp duty to stimulate the housing market whilst giving support to first time buyers.
The most recent incentive for Stamp Duty Land Tax (SDLT) applies for residential properties purchased from 8 July 2020 until 31 March 2021 inclusive. As announced by the Government.
How much is the reduced stamp duty?
If you purchase a residential property between 8 July to 31 March 2021, you will only have to pay stamp duty on the purchase price of property which is above £500,000, where applicable.
Property Value Stamp duty
Up to £500,000 Zero
The next £425,000 5%
The next £575,000 10%
The remaining amount 12%
If you are purchasing an additional property (i.e. A second home or an investment property) an additional charge of 3% is applied.
When will stamp duty holiday end?
The stamp duty holiday runs for nine months from July 2020 through to March 2021. This means property purchases must have completed before 1 April 2021 in order to qualify for this incentive.
How long does it take to get a mortgage?
Applying and securing a mortgage can be a time-consuming process, this includes finding a suitable deal, submitting an application and the supporting documentation plus the time taken for the mortgage lender to underwrite and offer the mortgage.
According to HomeOwnersAlliance the average time to get a mortgage offer accepted is between 18 to 40 days.
How long does it take to buy a house?
There are several steps to buying a house. A very simple guide to these include:
- Instructing an estate agent to sell your existing property if required
- Finding a new property
- Arranging your mortgage
- Appointing a solicitor to exchange contracts and complete the legalities
- Collecting the keys and physically moving into the property
On average it is said that the complete process of moving into a new house is about 6 months, depending on specific circumstances – no house move is ever the same so best to be prepared for the worst-case scenario. For example, in the current climate of COVID-19 cases can take longer due to levels of demand and organisations working under revised conditions.
What happens if I miss the stamp duty holiday?
Should your residential property purchase complete from 1 April 2021 onwards your purchase will be subject to new stamp duty rules:
Property Value Stamp duty
Up to £125,000 Zero
The next £125,000 2%
The next £675,000 5%
The next £575,000 10%
The remaining amount 12%
If you are purchasing an additional property (i.e. A second home or an investment property) an additional charge of 3% is applied.
First time buyers can benefit from a discount to these rates, where no stamp duty will apply for purchases up to £300,000, with a 5% tax on the portion from £300,001 to £500,000. For purchases over £500,000 this discount does not apply.
For full information about stamp duty visit the government website. (https://www.gov.uk/stamp-duty-land-tax)
At present there have been no announcements about any extensions or follow on schemes, however there may be further initiatives from the government so you should keep up to date with any developments. (https://www.gov.uk/stamp-duty-land-tax)
