In some parts of the UK, Brits are liable to pay Stamp Duty when they buy a residential property or a piece of land costing more than £125,000. For second homes, the threshold is £40,000. Stamp Duty is applied to both freehold and leasehold properties, meaning it doesn’t matter if you have a mortgage or paid for your property upfront. For people looking to buy a home in Scotland, they will be liable for Land and Buildings Transaction Tax (LBTT), while in Wales, the Land Transaction Tax (LTT) replaces the Stamp Duty.
When will the Stamp Duty holiday start?
Chancellor Rishi Sunak has announced a Stamp Duty holiday in a bid to boost Britain’s housing market.
The temporary measure would mean Brits wouldn’t have to pay the tax on purchases of homes costing up to £500,000.
The aim of the scheme is to help people who have been financially disadvantaged as a result of the coronavirus pandemic.
The Chancellor may unveil the holiday as part of his mini-budget, expected to be delivered in the House of Commons on Wednesday, July 8.
READ MORE: Budget 2020: Rishi Sunak reveals new stamp duty surcharge (2020-03-11) [VIDEO]
The holiday is expected to be formally announced and implemented during the Autumn Budget.
Although no date has yet been set for the Budget, it is understood it will take place around October.
The move comes after it was revealed the housing market was badly affected at the start of the coronavirus pandemic, as house moves were put on hold and prices began falling.
According to the Nationwide house price index for May 2020, house prices fell by 1.7 percent from the previous month, making it the largest drop in 11 years.
How much money would you save through a Stamp Duty holiday?
According to the Office for National Statistics (ONS), the average house in England in March 2020 was priced at £248,000.
If you purchased a home at the average price as a first-time-buyer, you would not have to pay any stamp duty thanks to the tax relief.
However, if a first-time-buyer bought a property for £500,000, they would save £10,000 in stamp duty.
Homeowners who purchased their property at a value of £248,000 would save £2,460 on stamp duty, providing the increased threshold comes into effect.
However, for lucky Brits buying a second home, the average price tag would save them a huge £9,990, with the assumption that the relief would be applied to second homes.
On June 30, Prime Minister Boris Johnson announced an affordable housing plan for first-time-buyers, which would mean a 30 percent discount.
However, the downside is that a number of lenders have withdrawn their high loan-to-value deals.
This means those hoping to get their first steps on the property ladder will now find the minimum deposit at 15 percent, instead of 5 percent.