Stamp duty 2020 – what the changes mean for you

Stamp duty land tax (SDLT) is the lump-sum tax that anyone buying a property or land costing more than a certain amount has to pay.

 There has been much excitement since Chancellor Rishi Sunak confirmed a stamp duty holiday on the 7th July, raising the threshold from £125,000 to £500,000 until 31st March next year. In the mini-Budget unveiled, he said that the changes would take effect immediately, cutting the average stamp duty bill by £4,500, with 9 out of 10 house buyers paying no stamp duty at all.

 Our time during lockdown has certainly got many of us yearning for a place to call our own or hankering after more space or larger garden. If you hadn’t yet got motivated to start viewing properties or putting your home on the market, then this latest announcement (meaning you could save up to £15,000) should make the prospect even more appealing. If the cost of downsizing has been a deterrent until now, you might also want to make the most of this unique opportunity!

 Don’t despair If you’re already under offer and part way through the process, (even exchanged contracts) you’ll still be able to benefit from the increased thresholds. The requirement to pay stamp duty is triggered when you ‘complete’ upon your purchase.

What the changes will mean for you

The stamp duty changes stand to benefit buyers the most in areas where the property prices are considerably higher than the national average – predominantly London and the South-East.

Indeed, Miles Shipside, a housing market analyst for Rightmove has said: “Buyers in higher priced areas with bigger deposits will gain the most if the Stamp Duty threshold is raised to £500,000.”

Until now, stamp duty was liable on all property purchases over £125,000, although different rules applied to first time buyers and landlords. If you need a quick recap on what stamp duty was previously charged at:

• Nothing on properties purchased for up to £125,000
• 2% on the portion of a property between £125,001 and £250,000
• 5% on the portion between £250,001 and £925,000
• 10% on the portion between £925,001 and £1,500,000
• 12% on the portion costing more than £1,500,001

First time buyers did get an added incentive to get on the ladder, only having to pay stamp duty on a property over the value of £300,000 and paying 5% on any portion between £300,001 and £500,000 (if the property was worth more, then the normal rules applied). Since the announcement, the proportion of first-time buyers paying no stamp duty at all on their purchase in the South-East will increase from 65.2% to 96.6%.

Second-home owners who were liable to pay 3% up to £125,000, 5% on the value between £125,001 and £250,000 and 8% between £250,001 and £500,000 will only now have to pay 3% up to £500,000.

Shared ownership schemes do make things slightly more complicated as you are effectively buying the property in stages and that means also paying the stamp duty in stages. However, you do have the option with this scheme, to pay the stamp duty in full up front, based on the current market value of the property.

What potential savings could you make in Wokingham. Do I need to pay stamp duty?

In Wokingham, an area where property is high demand, which is reflected in the higher than average prices, there is potential to make substantial savings if you are stepping up or down the ladder! Check out the savings you could make on average priced flats and houses within Wokingham* (similar savings can also be made from property purchases in neighbouring Crowthorne).

*Zoopla data, correct as of 10th July 2020

First time buyers and those looking for a second home also stand to make considerable gains from this extraordinary stamp duty holiday.

With savings to be made across the board, there has never been a better time to take action and progress a move to your dream property. We understand that you may be daunted at the thought of lots of people traipsing around your home at the moment but we’re proud to offer a state of the art virtual viewing service and also have strict Covid-19 safety measuresin place for in-person visits.

Our virtual viewing service enables all first viewings to be conducted online via a 3D 360 degree immersive tour. Only serious buyers will be able to visit your property in person and you will be able to use these online tours to quickly whittle down your shortlist of suitable homes for viewing. More about our property marketing.

Have a look at some of the properties we currently have for sale in and around Wokingham and Crowthorne, many of which you will now be able to buy stamp duty-free.

If you’ve been sitting on your hands wondering if it’s the right time to move, we’d be happy to come out and give you a no obligation valuation to get the ball rolling. The sooner you can get on the market, the more likely a completion by the 31st of March deadline. Contact us on Wokingham 0118 9776 776 or Crowthorne 01344 779 999 for more information.