The Stamp Duty Land Tax holiday, which was recently extended, is set to finish at the end of June. What can homebuyers expect once the rates return back to normal?
What is Stamp Duty?
Stamp Duty Land Tax (SDLT) is a tax that must be paid when someone purchases a property over a certain value. At the moment, this threshold has been increased to £500,000 as part of the stamp duty holiday, and is due to be lowered back to £250,000 from 1st July.
To find out how much stamp duty you’ll have to pay, you can use our online stamp duty calculator.
The Stamp Duty Holiday Explained
The stamp duty holiday was put into place to help boost the housing market following the pandemic, as lockdown meant fewer people were buying properties. It also aimed to give a helping hand to those looking to purchase homes during the pandemic, as finances took a hit for many people during this time.
As a result, the stamp duty threshold was increased to £500,000, meaning homebuyers don’t have to pay stamp duty if they buy a property that is priced underneath this figure. Once the stamp duty holiday ends, the threshold will be gradually lowered in a “staggered” return to its former place at £125,000.
From 1st July, the threshold will be lowered back to £250,000, meaning those looking to buy a home at a price greater than this will have to pay the additional tax. Then, in October, the stamp duty threshold will be lowered back to its normal limit of £125,000.
When Will the Stamp Duty Holiday End?
The stamp duty holiday is set to end on 30th June 2021, meaning that property purchased on or after 1st July 2021 will be subject to the lower threshold.
The government has stated that for those looking to purchase their first home after 1st July 2021, the higher threshold still stands.
What Will the End of the Stamp Duty Holiday Mean?
Once the stamp duty holiday finishes, those looking to buy a new home will have to pay the additional tax if the property is worth more than £250,000. While this adds on an extra expense for homebuyers, it’s a positive sign for the housing market, which is currently booming despite economic uncertainty posed by Covid-19 (Which, 2021). However, this may change after the staggered return to the normal threshold of £125,000 in October.
As the deadline is coming up, this means that any homes purchased but not completed before 1st July will be taxed against the lower threshold.
What Should Homebuyers Keep in Mind?
Homebuyers should keep in mind that, as it’s unlikely there will be another extension to the stamp duty holiday, there will be additional costs associated with purchasing a home over £250,000 after the end of June.
This may mean that homebuyers may have to plan their finances ahead more efficiently, which could involve saving money for longer or placing money aside to cover the extra cost if this is unexpected.
How Taylor Cole Can Help
As experienced estate agents in Tamworth, we have extensive knowledge on stamp duty, as well as any additional help you can receive when purchasing your next home, for example, the government’s 5% deposit scheme.
If you’re looking to buy a new home in Tamworth or the surrounding areas such as Sutton Coldfield or Lichfield, and would like to know more about how we can support you, please get in touch with a member of our team today by calling 01827 311412 or emailing sales@taylorcole.co.uk. You can also read our guide to buying a property here.