The government's announcement that Stamp Duty Land Tax (SDLT) is being reduced until 31st March 2021 is a welcome boost for the property market.
In his Summer statement chancellor Rishi Sunak announced that no stamp duty will be paid on the first £500,000 of the purchase price provided that the Buyer owns no other residential property (worldwide), so until 31st March 2021 the new rates of tax will be:
| Property |
SDLT rate |
| Up to £500,000 |
Zero |
| The next £425,000 (the portion from £500,001 to £925,000) |
5% |
| The next £575,000 (the portion from £925,001 to £1.5 million) |
10% |
| The remaining amount (the portion above £1.5 million) |
12% |
Buyers who already own another residential property will continue to pay the 3% SDLT surcharge but they will also benefit from a reduction in the overall amount payable:
| Property |
SDLT rate |
| Up to £500,000 |
3% |
| The next £425,000 (the portion from £500,001 to £925,000) |
8% |
| The next £575,000 (the portion from £925,001 to £1.5 million) |
13% |
| The remaining amount (the portion above £1.5 million) |
15% |
Buyers should note it does not appear there is any change in the SDLT payable when buying in the name of a company, where the rate remains a flat 15% unless the property is being bought for the purposes of a property rental or trading business.
It will be interesting to see if the announcement prompts increased activity and whether buyers alone benefit from the savings as a shrewd seller may look for a higher price following the announcement.
The reduced rates also offer an additional incentive for international buyers looking to invest in UK before the 2% SDLT surcharge for non-resident buyers is introduced next April.