STAMP duty has been scrapped on properties up to £500,000 from today.
The Chancellor Rishi Sunak announced the temporary relief in the Commons as part of a raft of measures that aim to boost the economy following the coronavirus lockdown.
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The holiday will run until the end of March and will be applied to all residential purchasers, including first-time buyers, second-steppers and those who are looking to downsize.
But Brits who are buying additional properties, for example buy to let, will have to pay the usual 3 per cent surcharge on properties below £500,000.
The move will enable some homes at the lower end of the London housing market to become exempt from stamp duty but crucially it will apply to hundreds of thousands of properties in the crucial “Blue Wall” seats that handed Boris Johnson his huge election win last year.
Here’s everything we know so far about the stamp duty holiday.
The stamp duty holiday will come into effect immediately, Mr Sunak confirmed today.
This will be a temporary measure running until March 31, 2021.
When Philip Hammond – the then Chancellor – announced a stamp duty relief for first-time buyers in the Autumn Budget in 2017, the ruling also came into effect immediately.
In fact, details published shortly after the announcement revealed that the relief would be backdated by a few hours to apply to purchases made from midnight on Budget day – November 22 2017.
The following year he extended the relief to include first-time buyers who purchased a shared ownership property, which could be backdated to November 22, 2017.
There is no suggestion that the Chancellor will backdate this latest stamp duty holiday.
Currently home buyers don’t pay any stamp duty on the first £125,000 of homes – the rate then go up in stages.
Buyers are charged 2 per cent of the value of the home that’s worth between £126,000 and £250,000, and 5 per cent on the next bit up to £675,000.
Today, the Chancellor announced that the tax-free property threshold will be raised to £500,000 for all homebuyers.
Currently, average property prices sit at £237,616, according to Halifax, so the temporary relief would mean that the majority of buyers won’t have to pay it.
But Mr Sunak said the average stamp duty bill will fall by £4,500.
Nearly nine out of ten people buying a main home this year will pay no stamp duty at all, he added.
First-time buyers are already exempt from stamp duty on property worth up to £300,000.
They are then charged at a rate of 5 per cent on the portion of the value of the property between £300,000 but less than £500,000.
The changes will only affect those who are buying a property worth more than £300,000 as they will no longer have to pay the tax on the portion that’s worth up to half a million pounds.
If a first-time buyer purchases a property for £500,000 ahead of March 31, they’ll save £10,000 in stamp duty costs.
This isn’t the first stamp duty holiday the government has introduced to kick start the economy.
In December 1991, Conservative chancellor Norman Lamont announced that the threshold for stamp duty would be raised from £30,000 to £250,000 for eight months.
The move was seen as a way to counter a slump in the housing market during the recession, and saw the number of home sales double, Homes and Property reports.
And in 2008, the then Chancellor Alistair Darling temporarily suspended Stamp Duty for a year for properties costing less than £175,000.
But it didn’t result in the boost for first-time buyers as they had hoped – pushing up property prices by 0.7 per cent.