The move in the summer statement creates an SDLT “holiday” on the first £500,000 of all residential property sales in England and Northern Ireland until 31 March 2021.
The increase in the zero tax band from £125,000 to half a million will immediately benefit buyers of higher-value homes and is expected to cut £4,500 from the average SDLT bill.
The injection of extra cash into the property market hit by coronavirus could create a knock-on boost for registered providers (RPs), property partner Sandy Munroe believes.
“This should be good news for RPs because it will make their open market sales slightly more affordable,” she said.
“Obviously it’s designed to put money in the pockets of those buying higher value homes, which perhaps the government sees as its core supporters.
“But property values are so high generally that the majority of social housing open market plots are sold at more than the SDLT threshold of £125,000.
“Removing the tax take on this slice of the market should create an increase in demand at a time when RPs’ open market sales look vulnerable to the downturn caused by the COVID crisis.”
The SDLT cut was announced in the chancellor’s summer mini-budget and applies to all residential property sales completing on or after July 8 2020, until March 31 2021.
The effect of the measures is to widen the SDLT nil rate band to cover the first £500,000 of all residential purchases in England and Northern Ireland, and similar measures have also been put in place in Wales and Scotland by their devolved governments.
The maximum buyers can save on a purchase is £15,000, if they are buying a property of £500,000 or more.
The SDLT changes come as the market for residential property shows signs of decline during the coronavirus pandemic.
It is also intended to boost a property market hit by lockdown. According to the Halifax, house prices have fallen for four months in a row in 2020 and the Nationwide Building Society reported the first annual fall in UK house prices since 2012.
However, following the SDLT reduction, the website Rightmove reported an increase in asking prices of 2.4% to an average national asking price of £320,265.
Mr Sunak claimed the average SDLT bill will fall by £4,500 because of the measures and that nearly nine out of 10 people buying a main home in 2020 will pay no SDLT at all.
Before the announcement, stamp duty in England and Northern Ireland was paid on land or property sold for £125,000 or more, while first-time buyers did not pay any stamp duty up to £300,000. This stamp duty holiday replaces the first-time buyer discount.
Landlords and second home buyers in England and Northern Ireland are also eligible for the tax cut but will still have to pay the extra 3% of stamp duty they were charged under the previous rules.
The government's annual take from stamp duty is around £12bn, according to the latest figures released by HM Revenue and Customs, equivalent to 2% of the Treasury's total tax take.
Please contact Sandy Munroe.
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