Extension of the SDLT Holiday
It may not be much of a surprise after weeks of speculation, that Chancellor, Rishi Sunak, announced in the 2021 budget that the current Stamp Duty Land Tax (SDLT) holiday will be extended until 30th June 2021.
The SDLT holiday was introduced last July, following the start of the Covid pandemic, to stimulate the property market. It will come as a relief to many, as a large number of people were expected to ‘miss out’ on the tax break, due to ongoing delays resulting from the pandemic. From July, SDLT will be payable on all purchases over £250,000 and this will continue until the end of September with ‘normal’ rates resuming from October.
What does this mean and who is eligible to benefit from the extended SDLT holiday?
For those purchasing a main residence, up to the value of £500,000 and completing before 30th June, no SDLT will be payable, as tax has been suspended on the first £500,000 of all property purchases.
The current holiday will be slowly ‘phased out’ and the Chancellor has confirmed that, after June 30th, the stamp duty holiday will be limited to buyers who are purchasing a main residence costing up to £250,000 and completing before the end of September.
The usual rates, starting with tax on purchases from £125,000, will resume from 1st October 2021. However, if you are a ‘first time buyer’ the SDLT relief for first time buyers may still apply. First time buyers purchasing their first home for £300,000 or less will pay no SDLT.
What if I am not purchasing a main residence?
Second-home buyers or investors will also benefit from the tax cut. Although they will still need to pay the existing 3% surcharge on secondary properties, they will benefit from relief on the first £500,000 paid until the end of the SDLT holiday.
What if I am purchasing under the Help to Buy Scheme?
In February, the current Help to Buy Scheme was extended until the end of May to compensate for construction delays due to the pandemic. Whilst this does not exactly match the SDLT extension, it will come as a relief to many home buyers still under the scheme who have been unable to complete before 31st March, giving them until 31st May to complete their purchase and also to benefit from the SDLT holiday.
Help to Buy have confirmed that there will be no further extensions.
What if I am purchasing a new build property and have agreed an SDLT allowance with the developer?
A number of developers had already agreed to cover SDLT costs for purchasers in the new build sector, if the build was not ready for completion before 31st March. It follows that, if contracts have been exchanged based on an allowance/incentive for SDLT, then this may still apply depending on the wording of the contract.
For others who have not yet exchanged, this may need to be re-negotiated with the developer if you are able to benefit from the extended SDLT holiday. The developers may no longer be offering the incentive on this basis or may be happy to proceed with a cash incentive – this will be specific to each transaction. It is also worth noting that any amendments in relation to incentives will need to be notified to the lender.
We anticipate a surge in enquiries over the coming weeks – please contact our Residential Real Estate Team if you need advice or assistance in buying or selling property.