In 2020, the UK government announced a stamp duty holiday in order to boost the housing market.

Due to the Covid-19 pandemic, the UK housing market was in turmoil. Buyers and sellers were worried about the future of the housing market, due to uncertainty around the pandemic. During the first lockdown in the UK, the government declared a complete ban on transactions related to the estate market, due to which buyers, sellers and all estate agents including estate agents in Manchester had to put all housing market-related activity on hold. Once the lockdown ended, the UK government announced a stamp duty holiday to boost the buyer’s and seller’s confidence, increase housing market activity, and boost the UK economy as a whole. As the months went by, the stamp duty holiday also underwent multiple changes. Here is all that financial backers require to think about the stamp obligation occasion in 2021.

What is the stamp duty holiday?

In simple words, the stamp duty holiday is a temporary suspension of stamp duty that is otherwise levied on the purchase of property in the UK. Due to the stamp duty holiday, first-buyers and seasoned investors were no longer required to pay any stamp duty on all properties that were valued under £500,000 including property for sale in Manchester. The stamp duty on properties valued over  £500,000 was also reduced drastically.

When did the stamp duty holiday start, and when will it end?

The stamp duty holiday was introduced in July 2020 and it was set to last till March 2021. However, upon seeing the enormous success of the stamp duty holiday, the UK government further extended it until September 2021. However, from June 30th June 2021 till 30th September 2021, the tax saving will be slightly lesser. Nonetheless, buyers and investors will be able to save thousands and thousands of pounds on their property purchases. 

What are the rules of the stamp duty holiday?

Usually, an investor who is purchasing a buy to let property would have to pay a 3 per cent stamp duty tax on any property valued over £125,000. For properties valued between £125,000 to £250,000, the stamp duty charge was 5 per cent, and for properties between £250,000 to £925,000, the stamp duty was 8 per cent. On the other hand, if first-time buyers were buying a property for personal use, there was no stamp duty to be paid on any property valued under £125,000. For a property valued between £125,000 to £250,000, the stamp duty charge was 2 per cent, and for a property valued between £250,000 to £925,000, the stamp duty was 8 per cent. 

Now, with the stamp duty holiday, buyers would only have to pay no stamp duty on properties under £500,000. Investors will have to pay just 3 per cent as the tax on properties under £500,000. For properties between £500,001 and £925,000, investors will have to pay 8 per cent as the stamp duty where for properties between £925,001 and £1.5 million, the stamp duty percentage has been decided at 13 per cent. The stamp duty for properties above £1.5 million remains the same as before at 15 per cent. For individuals who are purchasing their first home, the stamp duty is 5 per cent for properties between £500,001 and £925,000, 10 per cent for properties between £925,001 and £1.5 million and 12 per cent for properties over £1.5 million.

How does the stamp duty holiday benefit investors?

Investors can save thousands and thousands of pounds on their property purchases. By doing so, investors will be able to save money in the long run and even recover their cost of investment quickly. Also, investors can make use of other government schemes such as the mortgage guarantee scheme to avail themselves of low deposit mortgages, which will further help them save money. For example, if a buyer invests in a property worth £700,000, no stamp duty will be charged on the first £250,000. The amount remaining will be £450,000, on which the investor will have to pay stamp duty. 

Will the stamp duty holiday be extended?

As of now, there is no certainty about whether or not the stamp duty holiday will be extended. Due to the various strains of Covid-19 that are arising around the world, the future of the UK housing market is still not sure. Closer to time, the UK government might decide to end the stamp duty holiday in September 2021 or continue until the pandemic settles down. However, if you are looking for a property for sale in Manchester, it is better to make the most of the stamp duty holiday now, instead of waiting to see what will happen in the future. 

If you have been thinking about climbing the property ladder and investing in some property or properties, then now is a good time to do just that. Despite the uncertainty, you will be able to secure some savings with the stamp duty holiday while it lasts!