August 27th, 2021. Ben Lloyd
What’s Next Following the End of the Stamp Duty Holiday?
On June 30th 2021, the ‘Stamp Duty Holiday’, which kickstarted the property market following the first coronavirus lockdown, came to an end. Now, a few months on, what is the state of the property market? And, what is next for Stamp Duty Land Tax (SDLT)?
What Was the Stamp Duty Holiday?
From July 2020 until the end of June 2021, stamp duty rates changed. No tax was required to be paid on the first £500,000 of a property purchase in England and Northern Ireland, where previously property buyers would pay on property purchases above £125,000.
A similar scheme was also launched in Scotland, and for Wales and it’s Land Transaction Tax.
July to October 2021: A Phased Return
Whilst the Stamp Duty Holiday has technically come to an end, the tax will not return to its original rates until October 1st 2021.
Following the end of this Stamp Duty Holiday there has been a tapering, meaning that the charge is only made on properties bought over £250,000 until 30th September 2021.
October 2021 and Beyond: A Return to Pre-Pandemic Levels
From 1st October 2021, the nil rate band will return to the standard amount of £125,000.
The stamp duty bands in England and Northern Ireland will return to as follows:
Up to £125,000 – no tax applied
£125,001 to £250,000 – 2%
£250,001 to £925,000 – 5%
£925,001 to £1.5m – 10%
Above £1.5m – 12%
So, for example, if you buy a property for £295,000 in October, you will pay 2% on £125,001 to £250,000 and 5% on the value between £250,001 to £925,000, meaning a total stamp duty land tax charge of £4,750. Meanwhile, the same property purchase prior to 30th September would only cost you £2,250.
Please note, Wales and Scotland have their own property tax schemes and rates may vary from the above.
There was a huge push for completions on property deals at the end of June to ensure purchases met the Stamp Duty Holiday deadline, and demand will continue for the next few months while savings can still be made.
When stamp duty does return to the original levels, we do anticipate a settling of the property market, but we do not expect demand to plummet. The furlough scheme also comes to an end in October, which could lead to job losses, something which may also affect mobility.
This slight drop in demand could see a cooling of the sharp increase in property prices we have been seeing over the last year or so, making the end of the year a highly desirable time to buy for cash buyers and those not in a chain. So, if you are a buy-to-let investor, winter 2021 may be a great time for expanding your portfolio.
Looking to Make a Purchase?
If you’re looking to purchase a property soon and take advantage of the discounted stamp duty rates but worry you may not secure a mortgage in time, we can help.
Whether it’s creating a bespoke mortgage application to appeal to lenders and ensure smooth and speedy processing, or the arrangement of short-term, stop-gap finance like a bridging loan, our brokers are on hand to make your property dreams a reality.
Get in touch today to learn more about the current stamp duty charges and how we can help you find the finance you need.
Article By Ben Lloyd
August 27th, 2021
Ben is the Director and Co-Founder of the Pure Group and Managing Director of Pure Property Finance.
Following a career in Barclays, where Ben was in the real estate finance team for 8 years, he decided that the market needed a more forward-thinking type of commercial brokerage so founded Pure Commercial Finance (now Pure Property Finance), the first company within the Pure Group.
Ben has extensive experience across the real estate sector and has participated in over £2bn of real estate transactions during the course of his career.
Ben oversees the general strategy at Pure Group and works with the senior leadership team to drive the Group forward. Ben is also on the Executive Committee of FIBA.See more articles by Ben