Movers set to save thousands!!
Have you heard the latest news? If you’re about to exchange and complete on a property purchase, you could be set for a substantial and unexpected saving! On July 8th 2020 the chancellor introduced a temporary measure to abolish stamp duty charges on the first £500,000 of a property’s purchase price. According to the Treasury, the change is set to benefit nine out of ten people moving up the property ladder, or downsizing, meaning they will pay ZERO stamp duty. The chancellor has calculated the saving to be an average of £4,500.
Stamp Duty Land Tax (SDLT) is a big money spinner for the government, with it bringing in around £12bn per year to the Treasury. Previous rates meant you’d pay out 2% for properties valued between £125,001 and £250,000, 5% between £250,001 and £925,000, 10% between £925,001 and £1,500,000 and 12% on properties valued over £1,500,001.
BIG SAVINGS!! On a property bought at £500,000 you will now save £15,000. Even on a property valued at £700,000 you will now pay £10,000 rather than £25,000 before the stamp duty holiday on the 8th July.
That means the property you were looking at and discounting because it needed a new kitchen, bathrooms or replacement windows is now a possibility because of the money you will be saving on stamp duty! It will also help if you’re reaching for a higher mortgage loan, as a reduction in the amount payable in stamp duty means you’ll have a larger deposit, so increasing your borrowing power.
Wanting to invest in a second home? You’re still going to save!!
If you’re buying an additional home in England and Northern Ireland the stamp duty holiday means that you would pay 3% on properties valued up to £500,000, and then 8% on the next £425,000 of the price, 13% on the next £575,000 portion, and 15% on the value above £1.5m. So the tax on buying a second home is still hefty, however, as an invester the stamp duty holiday will still benefit you to a large extent. For example, a second home valued at £500,000 before the stamp duty holiday would have cost £30,000 in SDLT, following the stamp duty holiday you will pay £15,000. This reduction will likely provide a boost to the buy to let market.
Interestingly, if you buy a plot of land on which to build a new home, you only pay stamp duty on the purchase price of the land, not the value of the finished property.
Another benefit to homeowners is the chancellor’s green homes grant valued at up to £2bn of government funds. From September homeowners and landlords will be able to claim up to two-thirds of the cost of making their homes more energy-efficient, up to a maximum of £5,000 in vouchers. Low-income families will be able to claim up to a maximum of £10,000, possibly covering the whole cost of energy efficiency improvements. Energy-efficient improvements include items such as more efficient boilers, loft insulation, double or triple glazing and more energy-efficient lighting. There is hope that people making these energy-efficient improvements will save up to £300 per year on their energy bills.
Speak to an expert today!
As always, we’re happy to talk through any aspects of this recent news and offer advice on getting your property to market. All you need to do is give us a call at either our Warsash Office, 01489 581482 or Bursledon Office, 02380 408200 or drop us an email at firstname.lastname@example.org.