All You Need To Know About Stamp Duty Holidays

Hello readers. It has been a rather eventful month for property investors! The new EICR regulations have come into force; the Government has confirmed 23 August as a definite date for the end of the eviction ban and MPs have rejected an amendment to the Right to Rent checks that will mandate landlords to check for EU settled status.

Furthermore, I am excited to announce the launch of a game-changing networking event designed for people who are passionate about and involved with property, including investors, developers, landlords: The Property Success Network.  Join the “Property Investors In The South East” Facebook page and keep your eyes on your inbox for details of our first event!

This week saw some big announcements from the UK Chancellor that will have a positive impact on the property market which I have been considering over the past few days. The two major items which are encouraging for property investors relate to the cut in stamp duty and the Green Homes Grant.

I want to give each policy its due focus, so will be writing a separate blog next week about the Green Homes Grant. I would be interested to hear what your thoughts are on these two new policies as you read the main points!

Stamp Duty Holidays

The main headline from this announcement was the immediate cut to stamp duty for properties up to the value of £500k. The “holiday” will end on 31st March 2021 and has been welcomed by homeowners and investors alike.

Some of you may have noticed that the Chancellor snuck the phrase ‘main residence’ into his speech and therefore hinted that this cut to 0% will not apply to second homes (which, would undoubtedly have been fantastic news for investors!).

I am pleased to see that there is a cut to stamp duty for the purchase of a second home, (although not to 0% as is the case for those purchasing a home as their main residence). This tax holiday means that second home purchases – up to the value of £500k – attract a flat 3% rate of stamp duty between now and 31st March 2021. The table below illustrates the new rates.

Band Pre July 8th 2020 July 8th 2020 – March 31st 2021 Old Max Cost New Max Cost Max Saving
£0 to £125,000 3% 3%* £3,750 £3,750 £0
£125,001 – £250,000 5% 3% £10,000 £7,500 £2,500
£250,001 – £500,000 8% 3% £30,000 £15,000 £15,000
£500,001 – £925,000 8% 8% £64,000 £49,000 £15,000
£925,001 – £1.5m 13% 13% £138,750 £123,750 £15,000
over £1.5m 15% 15% NA NA £15,000
This is brilliant news for investors as any savings are always welcome and a saving of up to £15,00 is very welcome!

Whilst it would have been great to see the Government cut stamp duty on second homes to 0% up to the value of £500k, I can completely understand why it would not be practical. A cut like this would undoubtedly lead to investors snapping up all the housing stock and further driving up property prices.

I believe that there will be an inevitable increase in property investment but, whilst savings such as the Stamp Duty Holiday are welcome, I am concerned that the savings from this will simply need to go into forking out for a larger deposit due to a reduced LTV as lenders are still being cautious. This saving may also be eradicated by an increase in house prices caused by a sudden rush to buy; I’ve already heard a few anecdotal reports from contacts of houses being sold fast in the past week due to the stamp duty cut.

Now is definitely the time to invest for those who can. With the saving on stamp duty being time-limited and property purchases generally taking anywhere between three and six months, investors must make the most of the benefit.

I have recently written an eBook that gives in-depth advice on making a property investment. The book mainly focuses on the Medway Towns and has been extremely helpful to many people since I launched it just over a week ago! Please do download a copy from here and tell me what you think.

As always, I hope that you have found this blog helpful. I will be more than happy to answer any questions you may have in relation to this or help in any other way you require. Please feel free to contact me via LinkedIn.

Hasan

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