The ‘Stamp Duty Holiday‘ was in place as a reaction to the pandemic, and the impact it had on the economy. If you’re looking to buy a house soon, it’s important to recognise that the stamp duty holiday has now ended. In this blog post, we’ll discuss what has changed since the holiday was brought to an end and what this might mean for buyers going forwards.
What has changed since 1st July?
The rules regarding stamp duty have been different since July 2020, with more relief being provided for buyers. Up until the 1st July 2021, buyers weren’t required to pay any stamp duty land tax on the first £500,000 of their property purchase. However, the rules were changed on the 1st July 2021, and the upper limit has been reduced to £250,000, with the following brackets being put into place:
- £0 – £250,000 = 0%
- £250,001 – £925,000 = 5%
- £925,001 – £1,500,000 = 10%
- £1,500,001 and over = 12%
These rates will remain in place until 30th September 2021. Once this period is over, stamp duty is set to return to the pre-July 2020 rate, which means the rates will return to the following:
- £0 – £125,000 = 0%
- £125,001 – £250,001 = 2%
- £250,001 – £925,000 = 5%
- £925,001 – £1,500,000 = 10%
- £1,500,001 and over = 12%
How will this affect first time buyers?
Under normal circumstances, first time buyer relief is the standard for those purchasing their first property. However, when the stamp duty holiday was announced, first time buyer relief was replaced by the reduced rates introduced by the government. Now this period has ended, first time buyers purchasing a property up to a value of £500k will still be eligible for reduced rates, which are as follows:
- £0 – £300,000 = 0%
- £300,001 – £500,000 = 5%
- £500,001 and over = standard rates apply.
How will this affect purchases of second homes?
For anyone looking to purchase additional property, you’ll need to be prepared to pay a greater rate of stamp duty. The rates for those buying second homes are currently (from July 1st – September 30th 2021) as follows:
- £0 – £250,000 = 3%
- £250,001 – £925,000 = 8%
- £925,001 – £1,500,000 = 13%
- £1,500,001 and over = 15%
After September 30th 2021, the rates will revert back to the following rates:
- £40,001 – £125,000 = 3%
- £125,001 – £250,000 = 5%
- £250,001 – £925,000 = 8%
- £925,001 – £1,500,000 = 13%
- £1,500,001 and over = 15%
Why was there a ‘Stamp Duty Holiday’?
The stamp duty holiday was introduced as a response to the challenges brought on by the pandemic. The government introduced the stamp duty specifically to help the property market and enhance the property market as a whole.
Was the ‘Stamp Duty Holiday’ a success?
Whilst there’s no denying that the stamp duty holiday gave the property market a much needed kickstart during a difficult period, the industry is complex and there are several factors that add to how the market acts.
When the stamp duty relief was introduced in July 2020, house prices surged, and it’s fair to assume that prices would not have risen so sharply without the stamp duty holiday in place. The holiday can be considered a success in the short term, as it did help to get people on the property ladder under difficult and uncertain circumstances.
