SDLT Cut Announced
Today, Wednesday 8 July 2020, Chancellor Rishi Sunak has announced that there will be a temporary cut to Stamp Duty.
The cut will take effect immediately and raises the threshold to £500,000 for all buyers. The threshold alteration will also help landlords expand their portfolio.
The Chancellor said that he wanted to boost jobs in the sector and improve confidence of buyers and sellers, cutting SDLT is one way to do this.
Over the past couple of days the property sector has been in a slight frenzy, as the ripple effects of supposed Governmental leaks surrounding potential reforms to stamp duty land tax (SDLT) in a bid to regrow the economy following the coronavirus has been doing the rounds.
Prior to the announcement, property portal Rightmove analysed the potential stamp duty savings for areas around England where people would benefit the most it option two was chosen.
Rightmove’s analysis was based on the SDLT threshold being raised to £500,000. It also factored in that the SDLT savings wouldn’t be for first-time buyers and are in places in the country where the average asking price is between £450,000 and £500,000. It is estimated that buyers could save a minimum of £12,000 under the new reform.
Mile Shipside, Property Expert at Rightmove, said:
“This move will help to keep the nation and wider economy moving because keeping the current momentum going will help prevent destabilising falls in property prices as unemployment grows, and enable a quicker economic recovery. Lockdown prevented 175,000 would be sellers from coming to market so we hope this Stamp Duty holiday will provide the spur for those missing movers to come to market. They will find there’s currently record demand for their properties from prospective buyers, with Rightmove enquiries to agents now double what they were before lockdown. Home-movers will be grateful that the changes come into effect straight away so they don’t have to delay their plans, and what we could see now is people rushing to get a price agreed before some sellers put their prices up in the hope people will be able to pay more because of the tax savings.”
Dr Thomas Quirke, Managing Director of SearchFlow said:
“The Chancellor has today taken decisive action to help further shore up the property market, by providing a boost that sees a Stamp Duty ‘holiday’ immediately come into force. By increasing the lower stamp duty threshold to £500,000 for property sales in England and Northern Ireland, for the next nine months, it will help to open up the market. It creates a financial stimulus for those who were perhaps considering moving to a larger house but were concerned about the financial outlay in doing so.
“The most important aspect of the announcement today is the timing; any delay in bringing the SDLT holiday into play could have had a catastrophic effect on the market, as people would wait for the tax break to commence. I commend the Chancellor for taking instant action.
“As for who this benefits, first time buyers were already exempt from SDLT up to £300,000, so I believe that the steps announced today are designed to stimulate the overall market. Those already on the property ladder who may be considering their next move are set to make big savings if the deal is completed before 31st March 2021, while freeing up more property for those entering the market. For example, someone purchasing a property at around £480,000 is set to save over £14,000 in taxation during the SDLT holiday, while the average Stamp Duty bill is set to fall by £4,500.”
Sean Reeves, Head of Residential Conveyancing at Letcher’s Solicitors, said:
“In my opinion the government should be looking to support first time buyers and working with lenders much the same as they did with the last crisis whereby, they guaranteed the last 5%-10% of the 90% and 95% LTV. This will then support the bottom of the market which will facilitate the market upwards.”
Phil Bailey, Sales Director for mortgage tech provider Twenty7Tec says:
“We hope that the housing market will get the stimulus it needs from the Chancellor’s announcement on stamp duty. For us to have a housing-led recovery, we need first time buyers in the market and this measure will go some way to helping alleviate the level of funding that they need to get onto the property ladder. However, it’s not a perfect solution. There’s a lack of mortgage products in the market in the 90%+ LTV range as lenders have adjusted for their risks and their own lending capacity. This means that deposit levels have, effectively, gone from 5% to 15%. Previously, this gap has been filled by the bank of mum and dad, but the last few months have eaten away at their savings and possibly their attitude to taking on new investments. There’s also less housing stock on the market, which means it’s a seller’s market.
“Unfortunately, this stamp duty holiday won’t really help with any of these points. In our view, it’ll drive a surge in demand, but it’s more than likely going to support people to buy bigger than helping those who are struggling to get onto the property ladder. The additional demand caused by this could push house prices up or see them stay the same and not drop as expected later this year.
“Speaking to lenders and intermediaries this week, there were two real worries in the market about this stamp duty announcement. First, that it has previously been mooted and not happened so people were questioning if it would happen this time. Second that it might be delayed until later in the year, which would induce an unnecessary halt in a housing-led recovery. Thankfully, the current Chancellor is someone who seems capable of getting things done and at pace. We’ll see what the data says about a continued recovery over the next few days and weeks.”
Responding to the Chancellor’s Summer Statement, Nick Leeming, Chairman of Jackson-Stops, comments:
“After writing to the Housing Minister in April, I am pleased to hear that the property industry’s calls for a stamp duty reform have finally been heard.
“Sunak’s stamp duty reform has come at the right time and will have an immediate impact on the volume of sales agreed in the coming weeks. With nearly one fifth of UK adults considering a home move in the next 12 months, this stamp duty holiday unlocks great potential for the market.
“There is no denying that stamp duty has previously put buyers off entering the market; 41% of our clients believe there should be a wholesale reduction in stamp duty across all price brackets. Meanwhile, over a quarter wanted Government to abolish stamp duty on all homes under £500,000. As such, there should be a flurry of fresh buyers entering the market imminently, with the hope of completing their transactions before the tax break comes to an end. We hope Government carefully evaluates how this increased stamp duty threshold improves the housing market and wider economy and considers a wider reduction across all price brackets in the near future.
“Upsizers across the country are set to gain the most from this stamp duty holiday, with savings of nearly £15,000 made available to those purchasing at the top end of this newly created stamp duty bracket. This is additional cash for a deposit, allowing these buyers to own more of their property from the start or indeed make a move sooner than they had originally planned. For first time buyers, the benefits will be concentrated in London and the South East where the average starter home is typically above the current stamp duty threshold for those purchasing their first home. With our latest research revealing that 40% of under 55s would consider a home move in the next two years, the new savings on stamp duty could certainly spur more families on to make a move sooner than they originally planned.”
Mark Hayward, Chief Executive, NAEA Propertymark comments on the Chancellor’s Stamp Duty Announcement:
“Following our engagement with HMT and MHCLG over the past few months, we welcome the Chancellor’s announcement this afternoon that he will be raising the threshold at which buyers will pay stamp duty to £500,000. This a is a welcome commitment by the government and we are glad that they have listened to our calls to help sustain the property market following lockdown. These measures will enable people looking to buy a home to have the confidence and stability to be able to move forward with their purchase, which in turn will have a knock on effect on the wider economy as people buy white goods and furniture. The market is moving well at the moment, however once furlough has ceased and the anticipated recession hits, the market might well need further financial impetus, therefore it is right that the sector is given the support and tools it needs to rebound over the next 9 months.”
Richard Donnell, Research and Insight Director at Zoopla, said:
“The immediate increase in the Stamp Duty threshold will help sustain the rebound in housing market activity across England. The benefits will be immediate; nine of ten transactions in England will no longer be subject to the tax and in London and the South East, home to more expensive properties, homebuyers can save up to £14,999 overnight.
“The Government will expect the change to stimulate more housing sales over the second half of the year and that savings made by buyers will be reinvested in home improvements, white goods and furniture, rather than bidding up the cost of housing.”
Adam Forshaw, Managing Director of Conveyancers O’Neill Patient, said:
“We’re thrilled with the Chancellor’s clear announcement on Stamp Duty – it’s a hugely positive move that will really get the property market moving. We are geared up for a burst in activity as homebuyers take advantage of this window of opportunity.
“The Green Homes Grant will also make an important difference, helping people make their homes cheaper and greener to run.”
Chestertons’ Managing Director, Guy Gittins, comments:
“The immediate raising of the threshold for stamp duty from £125,000 to £500,000 until 31st March next year will provide a welcome boost for the housing market which in turn will also have a positive impact on the wider economy.
“This is particularly good news for first time buyers and those buying below £500,000 who will benefit immediately from what is effectively a stamp duty holiday. However, every buyer stands to benefit from this particular change and even those spending £500,000 and above will save £15,000. With mortgage interest rates still very low, now is a great time for buyers to get on the housing ladder or to make a first move to their next home. We may also see landlords who have been thinking of selling take the opportunity to test the sales market in London, where rents have recently fallen as a result of Covid-19 which could result in a much needed increase in the number of properties available for sale in the Capital.
“Housebuilders also stand to benefit as around 41% (25% in London which in 2019 reached 53%) of their buyers up until the end of 2019 have made use of the Help-to-Buy (Equity Loan) scheme where the average purchase price is a shade under £267,000, rising to £427,500 in London.
“We support any measures to protect the environment and the announcement that the Government will provide a £2bn grant scheme in England to provide homeowners with vouchers worth up to £5,000 to make energy-saving home improvements is good news.”
Ross Counsell, chartered surveyor and Director at Good Move, says:
“It has just been confirmed that stamp duty in the UK will be abolished immediately on homes worth up to £500,000 and this cut will last until March 2021.
“After a rocky few months for the UK housing market, this is a positive step forward and will provide a further boost to demand for housing. We believe current homeowners that have recently been hesitant to sell their properties due to the current climate will now be more inclined to put their properties on the market.
“Whilst some first-time buyers may not see a saving from the stamp duty holiday (as they have never been required to pay stamp duty on purchases up to £300,000), they will most definitely benefit from an increase in the number of properties available due to sellers putting their homes on the market.”
John Goodall, CEO at Landbay, said:
“The Green Homes Grant for homeowners and landlords as well as the reduction in stamp duty is a really positive move by the Chancellor. While, inevitably, the additional 3% stamp duty will remain in place for those who already have another property, for landlords buying a property of £475,000 for example, this will mean a saving of £13,750 in stamp duty, which is a huge opportunity for those looking to expand their portfolios. It will also give landlords the opportunity to move properties from their own name into limited companies, which they may not have done previously due to the stamp duty implications.
“In addition, the incentives to bring back furloughed workers and the investment in hospitality should mean that unemployment may not be as high as some may have expected. With the number of schemes now in place to support jobs this should give landlords some confidence that there will be fewer rental defaults than may have been the case.
“This is clearly a positive way forwards both for homeowners and for landlords and should deliver the kickstart to the property market that the Chancellor wanted to achieve.”
Lee Pickett, real estate partner at global legal business DWF, comments on the Chancellor announcing cuts to Stamp Duty Land Tax. He said:
“The Stamp Duty Land Tax (SDLT) cut by the Chancellor is a nice boost for the housing market which is often considered the bedrock of the wider UK property market. Those not yet committed to a house purchase may be encouraged to follow through rather than withdraw (in many cases collapsing a chain of several transactions).
“In some cases where those who were minded to sit tight and consider whether to move within the housing ladder or convert from renting to home ownership, will now be encouraged to do it now because of the considerable savings available until March 2021.
“Where new build sales were incentivised by SDLT contributions, those costs which were effectively considered price reductions by mortgage lenders are now being met by the public purse which should give a boost to house builders and help stabilise or even improve values/ house prices.”
Sharron Carle, Tax Solicitor who specialises in real estate transactions at Keystone Law, said:
“What a great announcement for home buyers. The typical SDLT payable on the first £500,000 of a residential purchase for a homebuyer is £15,000. This is an instant saving for all homebuyers in the country.
“Whilst buy to let investors won’t receive a complete “holiday” from the tax, due to the additional 3% charge which will still apply, there is still a very worthwhile saving to be had as they too benefit from the rise in the threshold.
“Yesterday a buy to let investor would have paid £30,000 on a purchase of a residential property for £500,000, today that charge has been halved to £15,000. Coupled with reliefs available to investors for multiple property acquisitions, the window of SDLT savings achievable from today until 31st March 2021, will undoubtedly be just the boost the housing industry needs.”