The Chancellor has granted a stamp duty land tax holiday to homebuyers in England and Northern Ireland with immediate effect. It means that buyers of homes valued at up to £500,000 will no longer pay any stamp duty on the purchase.
In a bid to boost the property market and encourage buyers to purchase property, Rishi Sunak has slashed the Stamp Duty levy and potentially saved investors and buyers thousands of pounds.
Stamp duty is paid on the purchase of a property and is charged based upon the property price. A 2% charge applies to properties between £125,000 and £250,000, so with the average home in England selling at £247,000, existing homeowners buying their next home could potentially save around £2,440 each.
The move is widely being supported in the industry. Lynda Clark, chief executive of the First Time Buyer Group, feels that the freeze will have long-lasting effects and could potentially lead to the property market making a more steady recovery.
She said: “The proposed changes to stamp duty will unquestionably be warmly welcomed by first time buyers – especially those with families looking for more space in their first home. The knock on effect will also be helpful to first time buyers – as homeowners may now take the opportunity to make a move into a bigger home, therefore freeing up more starter homes for purchase.
“We know that young people in particular are increasingly likely to suffer as a result of economic hardship, and so the removal of an additional tax when buying a home will prove to be a lifeline.
“The stamp duty changes, while temporary, will have long lasting effects and will encourage buyers to go ahead with their purchase – and in turn, the property market can make a more steady recovery.
Becky Munday, founder of Munday’s estate agents, welcomes the stamp duty changes and claims they will be a “lifeline”.
Munday said: “We welcome changes made by the Chancellor to stamp duty, this will certainly be a lifeline to the industry as buyers will be further incentivised (the interest rate cut earlier in the year was well-received) to buy, and to buy now. Likewise, recently hikes in stamp duty has been detrimental to stock, as buyers who are asset rich but cash poor have been unable to move due to the high costs associated.”
The last stamp duty holiday during the 2008 financial crisis, as Chancellor Alastair Darling attempted to lift the market.