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Chancellor Rishi Sunak has extended the current stamp duty holiday by three months. Initially set to end at the end of March, it is now to continue until 30th June. The move is welcomed by many home buyers who were struggling to complete transactions before the March deadline due to lender backlogs.
It was announced last year that the stamp duty nil band threshold would be increased from £125,000 to £500,000 for property sales in England and Northern Ireland. We now know that this will continue until the end of June, with the threshold being lowered to £250,000 until 30th September and then back to the normal £125,000 limit thereafter.
This is the breakdown of the current stamp duty rates for main residential properties (please note that there is a 3% addition for additional properties):
Up to £500,000 – 0%
£500,001 to £925,000 – 5%
£925,001 to £1.5m – 10%
Above £1.5m – 12%
For example, if you bought a house for £600,000 under the current stamp duty holiday, you would pay nothing on the first £500,000 and then 5% on the remaining £100,000, which would be £5,000. For the same property if the bands were reverted back to normal, the stamp duty liability would increase to £20,000.
The Chancellor also announced the introduction of 95% loan-to-value mortgages, meaning that so long as it meets affordability criteria, first time buyers will be able to buy properties with only a 5% deposit. Lenders that will be offering this from next month include Lloyds Bank, Natwest, Santander and HSBC. Virgin Money will look to follow in due course.
Other key points announced include an extension to the furlough scheme and self-employment grants until September, as well as freezing fuel duties and increasing corporation tax through a tiered system from 2023.