What the stamp duty holiday means for you
The stamp duty holiday announced in Chancellor Rishi Sunak’s summer economic forum could save homebuyers in Chiswick £15,000.
The price threshold at which buyers start to pay stamp duty is now £500,000, up from £125,000.
According to the latest Land Registry data, the average sale price in Chiswick so far this year is £1,153,237, with all transaction reported so far having taken place before lockdown. This means that someone buying a home in W4, is likely save the maximum £15,000.
So for example, this will bring the stamp duty bill for a £1m home from £43,750 down to £28,750, a saving of around a third.
Analysis from property advisers Savills suggests just under 90% of home sales in England are below £500,000, and would not pay any basic stamp duty. The most significant saving is for home movers, as first-time buyers already have tax relief if they buy a property worth less than £500,000. There were 289,000 mortgaged home movers in 2019/20, according to UK Finance data.
First-time buyers will still benefit, even if they have relief from much of this tax already. More movement among home movers and downsizers will free up much needed housing stock, so there’ll be more homes available for first-time buyers to move into.
Lifting the barriers to moving home will unlock more transactions. That means households can move to areas with stronger, more productive employment markets, which will help the economic recovery. It also means we can expect more spending on removals, furniture, and decorating, all of which will help boost the economy further.
Investors and second home buyers will still have to pay the Higher Rate for Additional Dwellings (HRAD), which is 3% of the property value. However, these buyers still benefit from the higher nil rate for basic stamp duty. Someone buying a second home worth £500,000 would pay £15,000 in stamp duty, half the £30,000 bill they would have paid before last week.
The holiday will last until 31st March 2021.