Following the 2021 Budget announcement, investors and buyers now only have to pay 3% on properties over £500,000.
Stamp duty is often paid within 14 days of acquiring a property by the solicitor to avoid the buyer facing any penalties or charged interest from HMRC: in most cases, the agency files and returns the stamp duty tax on the buyer’s behalf and adds the cost of such to their own fees. In some cases, however, an agency won’t offer to do the stamp duty tax and will leave that fiscal responsibility to the buyer.
Buyers also do not have to pay the sub-charge if the property they’re purchasing is replacing a previous, main residence that’s already been sold: if that prior property hasn’t sold by the time they have purchased the replacement, they can apply for a refund as long as it’s within 36 months of being sold. If it takes more than 36 months due to the delays caused by the coronavirus pandemic, buyers may apply for a claim from HMRC detailing why the sale took longer than expected.
How will a stamp duty extension impact the property market?
Stamp duty has its pros and cons, with some people finding it to be an obstacle in terms of completing transactions. However, the stamp duty holiday has proved mutually beneficial, providing buyers and investors alike with the opportunity to get their foot onto or move up the property ladder. For investors in particular, the holiday has provided the opportunity to establish or expand their portfolios whilst making significant savings on newly purchased properties and land.
When 2021 began, the future of the property market was uncertain. Now, with the extension of the stamp duty holiday, new avenues for investors have opened up. During this time, buyers’ eligibility will increase (as the reduction in stamp duty leaves room for a larger deposit), encouraging purchasing activity. This will prove to be beneficial for investors with an increase of house buyers providing a higher rate of financial returns.
Since the SDLT holiday was announced in 2020, there has been notable growth in property prices within the UK property market, due to a continued imbalance in supply and demand (which has only been furthered by the introduction of the 95% mortgage scheme in 2021), as well as a notable rush to purchase properties and produce significant savings whilst the scheme is still in effect: according to data provided by Rightmove, the traffic to their website exponentially increased by 22% when the tax break was announced, with an estimated annual growth rate of 8.5% in December of that year.
Some landlords may argue that there is a need to abolish SDLT in its entirety, 67% according to data collected by the FJP Investment. However, the benefits seemingly outweigh this concept, with the extension proving highly successful thus far, and data suggesting that the property market is set to become more fortuitous throughout the year.