Published: 23/06/2021 By Jessica ChalmersWhat is Stamp Duty?
Stamp duty land tax must be paid if you buy a property or land over a specific price in England & Northern Ireland. (The tax is different if the property or land is in Scotland or Wales). The threshold is where stamp duty starts to apply; if you buy a property of less than the threshold, there is no stamp duty to pay. If you're purchasing a residential property, there are different rates of stamp duty if:
- You're a first-time buyer
- You already own a property and are buying a second residence
- You're not a UK resident
You have 14 days from the date of completion to pay your stamp duty, or you could face a fine. 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 and add the amount to their fees.
Stamp Duty Holiday - What is involved:
Initially, the stamp duty holiday was set to end on 31st March, with the temporary threshold set at £500,000; this is now in place for a matter of days until the 30th June. Then to smooth the transition back to normal, the stamp duty threshold from the 1st July 2021 will be £250,000 and will return to the standard threshold of £125,000 on 1st October 2021.
The stamp duty holiday has impacted the property market significantly: According to recent data from the UK's leading property portal Rightmove, there are 704,000 sales currently going through the conveyancing process across Great Britain, the highest over the past decade.
As we approach the end of the stamp duty holiday, we are noticing that
properties in the price bracket of 500k-700k face the most significant impact with stamp duty doubling and, in some cases, tripling:
- £500k property sold before 30th June '21 would pay £0 stamp duty and from the 1st July would pay £12,500.
- £600k property sold before 30th June '21 would pay £5k stamp duty and from the 1st July would pay £17,500.
- £700k property sold before 30th June '21 would pay £10k stamp duty and from the 1st July would pay £22,500.
We are also finding that buyers who were willing to buy a property that needed a bit of TLC during the stamp duty holiday were happy to do so because the £12k saving would go towards a new kitchen/bathroom, but without that saving the property becomes less desirable/affordable.
Estate agents come into their own during these times because they have an intimate understanding of each price range. As Chiswick's number one agent, we can offer the best advice to both sellers and buyers. Due to the sheer volume of sales we do, we're in a place to understand pricing street by street and property by property. This means our vendors get detailed market-leading advice on how to sell for the best possible price, and buyers respect our valuations.
We have noticed that with property sales at £1.5 million and above the stamp duty change is having minimal impact. Tim Bannister, Rightmove's Director or Property Data states: 'The easing of restrictions, extended stamp duty holiday, better mortgage availability for first-time buyers, race for space and relocation plans have all combined to create the biggest conveyancing logjam we've ever recorded over the past ten years. We really hope those who had at least four months to make it through to completion will make it in time to beat the first stamp duty deadline, but with the tapering until September many will still make some savings so all will not be lost. The pace of properties coming on and off the market is also the quickest we've recorded, and agents are telling me they have multiple viewings followed by a number of offers within days of a property first appearing on Rightmove. At the start of this year we had anticipated a quieter second quarter of the year. Still, buyer demand and the pipeline has continued at pace, making it an incredibly busy time for agents and conveyancers in many areas right now.'
If you would like property advice, please do get in touch, and our award-winning team will be more than happy to help: 02087478800.