Property news : Changes to stamp duty land tax threshold on buying a property in England
Chancellor Kwasi Kwarteng has just announced changes to the Stamp Duty Land Tax threshold from £125,000 to £250,000 as part of a ‘game-changing’ Growth Plan.
What is Stamp Duty Land Tax (SDLT)?
If you buy a property or land over a certain price in England and Northern Ireland, you must pay Stamp Duty Land Tax (SDLT).
You pay the tax when you buy a freehold property, buy a new or existing leasehold, buy a property through a shared ownership scheme or you
are transferred land or property in exchange for payment.
What are the current rates?
Under the present system no Stamp Duty is paid on the first £125,000 of any property purchase. The threshold for non-residential land and properties is £150,000.
Between £125,001 and £250,000 Stamp Duty is levied at 2%.
£250,001 and £925,000 it is 5%
£925,001 and £1.5 million it is 10% and anything above £1.5 million 12%
For first-time buyers the threshold at which stamp duty is paid is £300,000. The changes should remove 200,000 people from having to pay stamp duty, Chancellor Kwasi Kwarteng said.
During the pandemic the threshold was raised to £500,000 which encouraged significant movement in the property market.
What are the new rates?
From (23rd September 2022) the threshold is being doubled from £125,000 to £250,000. This means buyers no longer pay stamp duty tax on the first £250,000 of a property purchase.
The threshold for first-time buyers to start paying stamp duty will be increased from £300,000 to £425,000.
Until then, stamp duty relief was not available for any first-time buyer home priced over £500,000. This threshold has now been raised to £625,000.
This has been announced as a permanent change in England & Northern Ireland, not just for a fixed period like we saw in 2021.
What does this mean for property prices?
Could it boost or simply just maintain property prices? It will almost certainly create more opportunities for those wishing to buy and sell. Some of the advantages that come with decreased or eradicated Stamp Duty is that it frees up funds for buyers to spend on moving. It may increase their maximum budget or give them extra money in their pockets to spend on home improvements after completion, allowing them to purchase that doer upper they may have previously ruled out. Any of these scenarios will lead to an increased level of property sales.
When is SDLT payable?
Within 14 days of completion. If you have a solicitor, agent or conveyancer, they’ll usually file your return and pay the tax on your behalf on the day of completion. They’ll then add the tax to their fees. They’ll also claim any relief you’re eligible for, such as if you’re a first-time buyer.
What happened during the last SDLT holiday?
During the Stamp Duty holiday of 2021, we saw a huge increase in the number of properties that came to the market. Along with this, came an influx of buyers. Everyone wished to cash in on the lack of or heavily reduced Stamp Duty and the benefits that came with this. This holiday period helped to keep the property market buoyant during what could have been an extremely difficult market, we would hope that this recently announced plan will do the same for this and future years to come.
At Sandersons UK, we are still noticing a high demand for properties on both the sales and lettings market. We are finding that some of our properties are sold or let (STC) before even launching them to the portals Rightmove, Zoopla and OnTheMarket as they are being secured by people already registered with us for pre-market property alerts.
What is likely to happen now?
We are experiencing a huge influx of new buyers following the announcement so if you are thinking of moving, now could be a good time to think about selling. There is no obligation to put your property on the market straight away, but we suggest you start with a valuation to give you an idea of a value for your own property to help plan your onward purchase price bracket.
