Stamp duty abolished up to £500k: What you need to know
Big news for house buyers: the Government has abolished stamp duty on house purchases below £500k in England and Northern Ireland until March 2021. Below we spoke to Lucian Cook at Savills to find out more about the changes.
So Lucian, the Chancellor has announced some big changes to stamp duty, what will that mean for people?
Stamp duty is the tax you pay when you buy a home. What Rishi Sunak has done is raise the threshold to £500,000, which means that for anybody buying a property for up to £500,000 they will pay no stamp duty until March 31st unless they're a buy-to-let investor or they're buying a second home.
What is the government trying to do by cutting stamp duty?
We've actually seen quite a lot of activity in the housing market since we've come out of lockdown. Now, clearly we've got some economic crashes coming up, particularly as the furloughing scheme ends, and so what the government's really trying to do is to keep the momentum that we've got in market now for a little bit longer. But also, this should help people who are struggling to make that move up the housing ladder by reducing some of the costs when they move.
Who will this help, primarily? Will it be first-time buyers, families stepping up the ladder or empty nesters downsizing?
It will definitely be of a real benefit to those people who are already on the housing ladder trading up. Interestingly, what we know is that those families trying to move up the housing ladder are looking for more space. Reducing the cost of stamp duty should help them either make the move that they couldn't already, or trade up.
I think for downsizers, it's also going to be of benefit, particularly if somebody is trading down into a property for less than £500,000 or anything around that level, so you would imagine it would stimulate activity across quite a lot of the market.
How long will the stamp duty changes last, and do you think it's long enough?
The stamp duty changes have immediate effect, which is great news. This will last until the end of March, which I think gives people a long enough window to find the property that they really want to move into.
What do you think will happen in the housing market? Do you expect a rush of sales, and will prices change as a result?
I think the big change here is going to be in activity. It's going to help those people who really need that saving to help them have the deposit and make the next stage to move up the housing ladder.
I think the impact on price is less easy to see. You need to consider that against the wider economic backdrop, and things such as the end of furloughing, which is going to make some minds quite cautious about how much they are prepared to spend when they make their next move.
For customers looking to secure a mortgage, will it impact the amount that their bank is likely to lend them?
I don't think it will, particularly, because we live in an age of mortgage regulation. But what it will do is mean that buyers have more cash at their disposal when they're looking to make the next move.
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