Propertymark campaign leads to a cut in stamp duty

Chancellor of the Exchequer, Rishi Sunak, has unveiled plans to temporarily overhaul Stamp Duty Land Tax (SDLT), as part of a range of plans to stimulate the economy during the COVID-19 crisis.

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Sunak’s proposals raise the threshold at which SDLT is paid from £125,000 to £500,000, meaning buyers of properties in England and Northern Ireland below this threshold will pay no SDLT on purchases that take place until 31 March 2021. The measure applies to transactions that are completed or substantially performed between 8 July 2020 and 31 March 2021 inclusive. The temporary rates do not apply where the transaction was substantially performed before 8 July 2020.  

The plans form part of a wider package of measures designed to boost economic growth and jobs.

The changes will come into effect immediately, bringing further confidence to the housing market as it emerges from lockdown, and enabling business to continue – speculation of a delay until the Autumn budget had prompted fears of transactions being put on hold. It is hoped that the SDLT holiday will prompt buyers to bring forward a planned purchase.

Propertymark campaigning

Propertymark called for a temporary reduction in property tax as part of a UK Property Support Package earlier in the year, and welcomes the development, having worked with Government departments to find ways to sustain the property market. We wrote to the chancellor in May of this year, asking him to create a stimulus package, including a SDLT holiday, to help re-activate the housing market in light of the Coronavirus pandemic.

Today's announcement demonstrates our continued discussions and work with the Government in order to find ways to boost the property market. Propertymark is pleased that this latest campaigning success follows our other successful work on business rates relief, commission in furloughed pay, and other support for the industry as the economy reopens.

Market shows signs of recovery

Regardless of, and perhaps due to, the COVID-19 crisis many families still want a bigger home, empty nesters still want to downsize, and first-home buyers still want to make the most of record-low interest rates. NAEA Propertymark’s latest Housing Market Report, showed the English housing market picking up as lockdown lifted. Today’s announcements bring some certainty to buyers, vendors, and agents, though there is more work to be done to ensure the property industry has the tools it needs to continue to emerge from the crisis.

The Government estimates that the changes mean nine in ten buyers will pay no SDLT on a house purchase.

Both first time buyers and buyers with a previous purchase will pay no SDLT on a purchase under £500,000.

Prior to these changes, first-time buyers paid no tax up to £300,000 and five per cent on any portion between £300,000 and £500,000.

For buyers with a previous home purchase, SDLT rates were two per cent on £125,001-£250,000, five per cent on £250,001-£925,000, 10 per cent on £925,001-£1.5m, and 12 per cent on any value above £1.5m.

Following our engagement with HMT and MHCLG over the past few months, we welcome the Chancellor’s announcement this afternoon that he will be raising the threshold at which buyers will pay SDLT to £500,000. This is a welcome commitment by the Government and we are glad that they have listened to our calls to help sustain the property market following lockdown.

These measures will enable people looking to buy a home to have the confidence and stability to be able to move forward with their purchase, which in turn will have a knock-on effect on the wider economy as people buy white goods and furniture. The market is moving well at the moment, however, once furlough has ceased and the anticipated recession hits, the market might well need further financial impetus, therefore it is right that the sector is given the support and tools it needs to rebound.

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Mark Hayward Chief Executive | NAEA Propertymark