Stamp Duty Threshold Increase

9th July 2020 posted in Property News

At Hunters West Hampstead, we want to ensure you remain fully up to date with relevant news about the property market, both in the local area and for the country as a whole.

On Wednesday 8th July, the Chancellor of the Exchequer, Rishi Sunak, has announced an increase in the stamp duty threshold in the Summer Update. The key points of the stamp duty changes are:

·         Stamp duty threshold is now £500,000

·         This increase in stamp duty threshold is set to run until 31st March 2021

·         The increase in stamp duty threshold takes place immediately

What have buyers been paying in stamp duty?

Before this announcement, property buyers in England have paid stamp duty on land or property when bought for a price of £125,000 or more. There has been an exemption for first-time buyers, who paid no stamp duty for property priced up to £300,000; and a proportion of the full stamp duty when the property was priced between £300,001 and £500,000.

Landlords, property investors and people who already own property and who haven’t sold it before buying their new one are required to pay an additional 3% on stamp duty.

What has changed, and why?

Reiterating what was stated above, the stamp duty threshold has been increased to £500,000 and is a temporary change, in place until 31st March 2021. The change is immediate.

This change has been undertaken to help buyers and the housing market. By helping buyers to lower the cost of buying a home, it makes the process of buying a home more affordable.

The move has been carried out to assist buyers who have been negatively impacted by the COVID-19 pandemic, and to provide assistance to the housing market. According to figures provided by Halifax, property prices have fallen for four consecutive months. Helping buyers to lower the cost of purchasing property will assist more people to buy a home.

How much could a buyer save?

As of July 2020, Zoopla lists the average price of property in West Hampstead as £855,070. Previously, a buyer (who was not a first-time buyer) would have paid £32,753 in stamp duty. Now, with the stamp duty holiday in place, the stamp duty for this price is £17,753.

This equates to the £15,000 saving created by the raising of the threshold.

The same can be said when looking at flats, the property type which is most commonly sold in West Hampstead, according to Zoopla.

The average price paid for flats in West Hampstead is £728,219. Previously, the stamp duty was £26,410 whereas now, with the stamp duty threshold having increased, the stamp duty is £11,410. Again, this equates to the £15,000 saving associated with the threshold sitting at £500,000.

This equates to a sizable saving for buyers in West Hampstead, and if you are looking for guidance on buying or selling in the area, we are here to help.

Industry experts have discussed the stamp duty holiday and its impact on buyers

Miles Shipside is the Housing Market analyst for Rightmove, and he said; “Buyers in higher-priced areas with bigger deposits would benefit most if the Stamp Duty threshold was raised to £500,000.

Miles continued by saying; “There’s currently record housing demand but the market also needs the ability for lenders to extend the availability of low deposit mortgages, vital to healthy first-time buyer volumes that help drive the rest of the market. A Stamp Duty holiday without better mortgage availability isn’t really helpful for hard-pressed potential first-time buyers who are already mainly exempt from it anyway.”

If you need any help or guidance regarding property matters, please get in touch. As your local housing market specialists, we will do what we can to ensure you make your next house move in style. Contact Hunters West Hampstead today for all your housing and letting needs.