The housing market has been severely affected by the pandemic, with activity and construction both slowing sharply. Moving house also has a multiplier effect on the economy as people tend to spend money decorating and furnishing their new home, with estimates suggesting that doing so drives additional spending worth about 5% of the house value.
It is thus crucial to ensure medium-term confidence in the property market and maintain the growing momentum since the easing of lockdown. To do this, the government have temporarily cut Stamp Duty Land Tax for home buyers across England and Northern Ireland until 31 March 2021.
The Nil Rate Band of Residential SDLT, in England and Northern Ireland, has been increased from £125,000 to £500,000 for property transactions completed between 8 July 2020 and 31 March 2021. The change means that no SDLT will be paid on 90% of property purchases saving £5,000 on the purchase of a £300,000 house.
One impact of additional spending in households is that homes may be underinsured.
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Note that the 3% supplementary charge for second and subsequent homes in England and Northern Ireland will continue to apply so the 3% rate would apply up to £500,000 purchase price.
Note also that there are different rates of tax on property transactions in Scotland and Wales as such taxes have been devolved in those countries.
If you have any queries about this then do not hesitate in contacting us on 01245 449060.
