The Chancellor has announced that the government will immediately scrap stamp duty for all homes under £500,000 in a bold move to help reboot the housing industry.
The tax holiday will run until 31st March 2021 in England and Northern Ireland meaning the average stamp duty bill will fall by £4,500. This statement will come as welcome news to many as the Chancellor announced ‘That one of the most important sectors for job creation is housing, and the construction sector adds £39 Billion a year to the UK economy, house building alone supports nearly ¾ million jobs with millions more relying on the availability of housing to find work.’
He added that ‘Property transactions fell by 50% in May, house prices have fallen for the first time in 8 years and uncertainties are bounds.’ With this statement at the full front of our mind we take a deeper look at what this means for economy and developers.
What has changed & how will it work?
- Anyone completing on a main residence, with a purchase price, up to £500,000 will pay no stamp duty up to the 31st March 2021
- The 3% levy paid if you already own a home or want to purchase an additional home worth more than £40,000 still applies, however you still pay less than you would due to the raised threshold
- New rules do not apply for Scotland and Wales
How does this help the Economy?
After Wednesday’s announcement shares in house builders and estate agents have rallied. With earlier expectations hoping these changes would come into place sooner rather than later we are all grateful that the chancellor has made them today. Hoping to reboot the property market and help, both, purchasers and developers. He stated that ‘we need people feeling confident. Confident to buy, sell, renovate, move and improve. That will drive growth, and growth that will create jobs so to capitalise on the housing market and boost confidence.’
Shaun Peart comments ‘It is encouraging that the government is recognising the importance of the sector. I am sure the whole industry will breathe a sigh of relief with this, very welcome, announcement. I see this as a positive step to stimulate activity within the marketplace and the wider benefit to the economy. Anything that assists the housing market in an upward direction, is always welcome.
How does this effect Scotland?
The Scottish government is to cut the rate of its devolved Land and Buildings Transaction Tax (LBTT) from this week, after Chancellor Rishi Sunak announced a limited time reduction in stamp duty land tax (SDLT), as part of plans to revitalise the housing market.
The threshold at which LBTT begins to be paid will rise from £145,000 to £250,000 on 15 July and remain in place until 31 March 2021, the same deadline as the changes in England and Northern Ireland.
Alan Baxter, Regional Manager Director (LSL L&NH) comments
'The raising of the LBTT threshold offers meaningful financial help to Scottish buyers. First and Second time buyers in particular now have the incentive to move house in the second half of 2020 and up to Spring 2021 and save substantial amounts of money that can go towards other parts of the house moving process. This will free up rental capacity and allow the market to fully open up again following the lockdown.'