The first Stamp Duty Land Tax holiday deadline has now passed. From 1 July 2021, we will see the holiday begin to taper off before ending completely on September 30 2021.
The SDLT holiday was introduced due to the Covid-19 pandemic and was originally in place until March 2021. This was extended to the end of June 2021.
Until June 30 2021, no SDLT was due on the first £500,000 of any primary residential property. From 1 July, this was reduced to the first £250,000.
Since the holiday was originally meant to end in March, the housing market has seen a wave of new buyers hoping to benefit from the tax relief. However, the surge in property purchases has increased the average transaction time. With thousands of homebuyers missing out on the stamp duty holiday, we expect to see several previously accepted offers on properties being renegotiated.
Since 1 July, the maximum saving from tax relief has fallen from £15,000 to £2,500. This suggests that a reduction of £12,500 will be a starting point for many renegotiation conversations.
The SDLT holiday has also pushed house prices to record levels. The market has seen the average property price increased by 13% or £29,000 according to Nationwide Building Society. This is further fuelling the desire to renegotiate offers.
The likelihood of a successful renegotiation of the price will depend on the seller’s situation. If they are keen to keep the sale on track as they have another home ready and waiting or they want their children to start a new school in September, they may be more likely to accept a lower offer.
Another way to renegotiate could be to ask the seller to split the cost of the SDLT bill. For example, if you needed to pay £8,000 of SDLT, they would decrease the selling price by £4,000 and you would pay the remaining SDLT yourself.
However, if there is no room for renegotiation, some buyers may need to consider pulling out of their transaction if they have not budgeted to pay the tax. It is also important to remember that if you do manage to negotiate a new price, you will need to update your mortgage documentation which may incur extra fees. This could also add extra time to the transaction.
If you have missed the first stamp duty deadline, all is not lost. You can still benefit from reduced SDLT if you complete by the September deadline. There are still reasonable savings to be made.
Key dates:
| 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 |
Stamp duty land tax 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% |
| Over £1,500,000 | 12% |
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.
*For UK resident buyers of primary residential properties.
