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Stamp duty holiday winners: who will save the most?

The government recently announced it’s raising the stamp duty threshold for England and Northern Ireland residents from £125,000 to £500,000 until 31st March 2021. This 'stamp duty holiday' means you’ll need to pay more than £500,000 on a main residence before paying any stamp duty.

And the new rules mean if you’re planning to buy a new home before next April, you could save up to £15,000 in stamp duty fees, which is a huge saving for many.

But who’ll benefit the most from this stamp duty holiday?

1. Buy-to-let investors

If you’re buying a second home or buy-to-let property, you can still take advantage of the stamp duty holiday as this would make it an ideal time to buy.
This is because in recent years the costs associated with buying a second home or investment property have increased.

In 2016, the government introduced a higher rate of stamp duty for people buying additional properties. This means you’ll usually have to pay 3% on top of the normal stamp duty rates if buying a new residential property means you’ll own more than one.

But while this surcharge remains in place, the fact that you’ll benefit from the stamp duty holiday may significantly cut the overall costs.

For example, if you buy an investment property for £350,000 you’ll pay £10,500 in stamp duty under the new rules. Before the changes you would have paid £18,000.

2. The ‘average’ home buyer

The average home in England costs £248,000 according to the Office for National Statistics’ (ONS) most recent UK House Price Index.

And if you buy a home for this price, you’ll fall under the new stamp duty threshold so your stamp duty bill will be zero. This compares to the £2,460 bill you would have faced before the stamp duty holiday was announced.

While in Northern Ireland, the average house price is £141,000. With the stamp duty holiday, there would be no stamp duty to pay for a property of this price. This is a saving of £320 compared to what would have been paid before.

3. Areas with high property prices

As we all know, property prices vary considerably around the country, and if you live somewhere where houses are expensive, you stand to gain the most from these rule changes.

For example, in London, the average home costs £486,000 according to the ONS.

So if you’re buying a home for this amount, under the new rules you won’t pay a penny in stamp duty. However, before the stamp duty holiday was announced, you would have paid £14,300 in stamp duty fees.

Also, if you’re a first time buyer living in an expensive area, you may benefit too. You would have previously been exempt from paying stamp duty on a first property below £300,000.

But in areas where first time buyers feel this figure can’t buy them the home they want, the increased threshold gives them more flexibility in what they can buy.

4. Anyone buying a house over £500,000

While it’s the case that anyone buying a home up to £500,00 will pay no stamp duty under current rules, it’s important to realise that if you’re buying a home over the threshold you’ll still benefit too.

In fact, if you buy a home that costs more than £500,000 you’ll get the maximum saving of £15,000 on stamp duty fees.

So if your new home costs £650,000, you’ll now pay £7,500 in stamp duty fees. Before the stamp duty holiday changes were brought in you would have paid £22,500.

And the changes mean even if your new home costs more than £1,000,000 you will still save.

The stamp duty bill for a property costing £1,000,000 now stands at £28,750. This compares to £43,750 before the stamp duty holiday.

To calculate how much you can save under the new stamp duty rules, use our simple stamp duty calculator.

For further help or advice with moving home, please get in touch with our friendly team of advisers - no question is too big or little for us.

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