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May 25

Top tips to beat the stamp duty holiday deadline

Reading Time: 4 mins

The property market has seen impressive price growth over the last few months. Would-be home buyers have rushed to beat the stamp duty holiday deadline in a bid to save thousands of pounds on the purchase on their next home. But what exactly are the parameters of the stamp duty holiday and can you still benefit from the measures?

 

What is the stamp duty holiday?

When Covid-19 threw the world into chaos in early 2020, the British government realised they would need to take steps to protect the nation’s economy.

Although property professionals were never expressly banned from continuing property transactions, lockdown advice was clear that people should only leave the house for essential reasons, and as a result the property market effectively ground to a halt for several months.

Once the property market reopened, the government wanted to offer a ‘shot in the arm’ of the economy. Alongside their furlough job protection scheme, the government announced a pause on stamp duty in a bid to jump start the property market. This meant that, for a set period of time, no stamp duty would be payable on any qualifying property.

 

Which properties does the stamp duty holiday apply to?

The stamp duty holiday has been applied to all primary residential property up to the value of £500,000. Those buying additional properties are still required to pay the higher level of stamp duty, minus the stamp duty savings.

 

Primary residential property:

Property value

 

Stamp duty payable under normal circumstances Stamp duty payable during stamp duty holiday
Up to £500,000

 

0-5% depending on property value 0%
The next £425,000 (the portion from £500,001 to £925,000)

 

5% 5%
The next £575,000 (the portion from £925,001 to £1.5 million)

 

10% 10%
The remaining amount (anything above £1.5 million)

 

12% 12%

 

 

Additional properties:

Property value

 

Stamp duty payable under normal circumstances Stamp duty payable during stamp duty holiday
Up to £500,000

 

3-8% depending on property value 3%
The next £425,000 (the portion from £500,001 to £925,000)

 

8% 8%
The next £575,000 (the portion from £925,001 to £1.5 million)

 

13% 13%
The remaining amount (anything above £1.5 million)

 

15% 15%

 

 

When will the stamp duty holiday end?

The stamp duty holiday was originally due to end on 31st March 2021. However, after fears over the economic impact of ending the measures so abruptly, the government decided to postpone the end date and instead implement a gradual withdrawal.

The transition period will last from 1st July 2021 until 30th September 2021. During this period, the 0% stamp duty rate will be reduced to apply to properties with a value up to £250,000.

From 1st October stamp duty will return to its normal level, with 0% stamp duty payable on properties up to a value of £125,000.

 

What can I do to get a quick sale and beat the stamp duty holiday?

With the stamp duty holiday saving home buyers up to £15,000 in stamp duty, it’s little wonder that would-be buyers have been scrabbling to complete on their purchase before the deadline.

However, with the rush to buy, property transactions have been significantly delayed and many home buyers are concerned that they will now miss the deadline.

So, what can you do if you’re worried you’re going to miss out?

 

If you’re a first-time buyer

If you’re a first-time buyer, the best way for you to speed up your property purchase is with effective communication.

Keep in regular contact with your conveyancing solicitor and estate agent to ensure you are readily supplying any required information and documentation. Keep pushing the sale through, asking for updates and agreed deadlines. Make it clear to your solicitor how important the stamp duty deadline is to your purchase and follow up with them regularly.

 

If you’re struggling to sell or have lost your buyer

Around one in three property sales will collapse before completion. This occurrence is upsetting enough in normal circumstances, but in the lead up to the stamp duty holiday deadline a sale falling through could be financially devastating.

If your property is worth less than £250,000 you will still have no stamp duty holiday until 30th September. If your property is worth more than that, you can still benefit from the stamp duty holiday, although with a significantly smaller saving. Between 1st July and 1st October, those buying a property worth £500,000 will be required to pay £12,500 in stamp duty; a £2,500 saving on the stamp duty payable when stamp duty rates return to normal on 1st October 2021.

If your onward purchase is on track, but you’ve lost your buyer, you’re going to need to consider your options carefully in order to benefit from the stamp duty holiday.

If you want to complete your sale before the 30th June deadline, in order to benefit from the full stamp duty holiday allowance, you could consider selling to a company that can purchase your house for cash. A genuine cash house buyer, that doesn’t rely on mortgages or investors, should be able to complete your house sale in as little as a week. Property buying companies will purchase your property at a discount, but for those who need to complete before the deadline, it’s an option worth considering.

If you want to complete the sale of your property in order to purchase your next home before the 30th September deadline, you may still have time. If you’ve not yet accepted an offer on your current property on the open market, it will be important to ensure the property is well-presented and priced to sell quickly. You will also need to ensure the sale is managed well and that you choose an estate agent and conveyancing solicitor who will be motivated to help you meet your deadline.

The stamp duty holiday we’ve seen introduced over the last year is likely to be a once in a lifetime measure, and one that can help you to save thousands on the purchase of your next home, so it’s worth taking advantage of if you possibly can.

 

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