As the stamp duty holiday begins to come to an end on June 30 2021, many homebuyers could be at risk of missing out on the tax break.
Property buyers in the UK must pay a tax known as Stamp Duty Land Tax (SDLT) when purchasing a property. An SDLT holiday was introduced due to the Covid-19 pandemic which saw the threshold at which buyers must pay this tax increased. In July 2020, the level at which SDLT must be paid was increased from £125,000 to £500,000.
Originally, the holiday was to end at the end of March 2021, but this was extended to 30 June 2021. Although it meant many more people could enjoy the tax relief on their property purchase, it encouraged a wave of new buyers. This now means that there are around 50,000 homebuyers who could still be at risk of missing out on the tax relief holiday according to property website Zoopla.
Due to a surge in property purchases, the average transaction time to complete on a property purchase has increased from three months to four months. Rightmove have reported that one in four buyers would look to renegotiate the purchase price with the seller if they miss the deadline.
From June 30 2021, the SDLT holiday will begin to taper off before ending completely on September 30 2021. This means if you exchange on or before September 30 but complete after September 30, the normal rate of SDLT will be owed.
|Until June 30, 2021||No SDLT will be due on the first £500,000 of any primary residential property|
|July 1 – September 30||No SDLT will be due on the first £250,000 of any primary residential property. For first time buyers, this is increased to £300,000|
|From October 1||The SDLT holiday has ended and the normal stamp duty rates apply as below|
SDLT rates from October 1, 2021:
|Property Value||SDLT rate|
|0 – £125,000||0%|
|£125,001 – £250,000||2%|
|£250,001 – £925,000||5%|
|£925,000 – £1,500,000||10%|
This means for the current UK average house price of £234,474, from October, the SDLT due will be £2,189.
While there has been a positive surge in the housing market, the SDLT holiday has seen the average mortgage deposit rise across the UK. The East of England has seen an increase of £3,498.
Whilst it certainly seemed like a good idea at the beginning, current homebuyers may wonder whether it was worth it as they may now face a larger financial hurdle to homeownership.
If you would like to discuss any points in this article further or are looking for legal advice relating to residential conveyancing, please contact Spire Solicitors LLP on 01603 677077.