When it comes to buying property, there are many costs you mightn’t originally consider. Whether you’re up-sizing into a family home, becoming a first-time buyer or even buying additional properties, legal fees, stamp duty, insurance and VAT all contribute to the extra fees that can make your purchase a minefield. However, the government has recently announced some changes to stamp duty following the coronavirus pandemic and subsequent reopening of the housing market.
Here we’ve laid out what the changes to stamp duty might mean for first-time buyers, for those moving up the property ladder into more expensive properties, and for those who may be considering buying additional properties such as a second home.
What is stamp duty?
Stamp duty is a tax that you may have to pay if you purchase a residential property or piece of land in England or Northern Ireland. Before the changes to stamp duty, it was paid on properties of £300,000 upwards. However, following the new changes in light of coronavirus, stamp duty fees now only apply to properties costing £500,000 and over, until March 31st 2021.
Changes to stamp duty for first-time buyers
Although the average price for a first home in the UK is £220,000 so you’d be exempt from paying stamp duty anyway, you’ll be able to take advantage of the changes to stamp duty if you’re planning on buying in a more expensive area (the average price for a first home in London is over £400,000, for example). If you’re buying your first home before March 31st 2021, you’ll only have to pay stamp duty if your property costs over £500,000.
Buying a new home
There are many reasons you might want to buy a new property – a lifestyle change, growing family or even new job are all life events that might necessitate a change in location or bigger home. If you’re already a homeowner and planning on moving into a new property, the changes to stamp duty apply. If you’re selling your home and buying a new house, you’ll only pay stamp duty if the new property costs over £500,000.
Buying additional property or a second home
If you’re planning on buying multiple properties to rent out or renovate, or choosing to buy a second home, you’ll pay stamp duty on freehold and leasehold properties costing more than £40,000. You’ll pay 3% on properties costing up to £500,000.
Please note that this article is to be taken as a guide only. If you’re interested in learning more about how the changes to stamp duty could affect your move, don’t hesitate to contact us.