Stamp Duty Land Tax holiday details

In a bid to stimulate the housing market following the initial COVID-19 lockdown, the Chancellor has announced a temporary holiday on Stamp Duty Land Tax (SDLT) for residential property purchases in England and Northern Ireland.

From 8 July 2020 until 31 March 2021, the threshold at which SDLT becomes payable has been increased from £125,000 to £500,000. This measure will save buyers up to £15,000 and removes the tax entirely for nearly nine out of ten people buying a main home.

How the savings work

Under the temporary rules, if you purchase a main residence for £500,000 or less, you will pay no SDLT. For properties over £500,000, you will pay 5% on the portion between £500,001 and £925,000, 10% on the portion between £925,001 and £1.5 million, and 12% on anything above £1.5 million. The maximum saving of £15,000 applies to any purchase of £500,000 or more.

Impact on second homes and buy-to-lets

The SDLT holiday also applies to the purchase of second homes and buy-to-let properties. However, the 3% higher rate surcharge for additional properties still applies. This means that an investor buying a property for £500,000 will pay a 3% SDLT rate on the entire purchase price (costing £15,000), whereas previously they would have paid a base rate plus the 3% surcharge (costing £30,000). The holiday provides a significant incentive for property investors as well as owner-occupiers.

A tight deadline

The SDLT holiday is a temporary measure, and the transaction must be completed (not just exchanged) by 31 March 2021 to benefit from the increased threshold. Given the expected surge in demand and potential delays in the conveyancing and mortgage approval processes, buyers should act swiftly to ensure their purchases cross the finish line before the deadline.