What’s been announced?
Forming part of his Summer Statement, Chancellor of the Exchequer Rishi Sunak announced that he is raising the threshold for SDLT.
Until 31st March 2021, anyone buying a residential home in England and Northern Ireland as their primary residence will not pay SDLT on any property that’s valued below GBP 500,000.
“We need people to feel confident, confident to buy, sell, move and improve that will drive growth, that will create jobs. So, to catalyse the market and boost confidence I have decided today to cut stamp duty.”Rishi Sunak – Chancellor of the Exchequer
SDLT is payable when a property is purchased in England and Northern Ireland. For property in Scotland, the tax is called Land and Buildings Transaction Tax, while in Wales buyers pay Land Transaction Tax.
These new changes announced by the Chancellor apply only to SDLT on residential property in England and Northern Ireland.
Do the changes also apply to property investors and overseas buyers?
Yes, they do. However, there is a slight variation.
If you are a UK resident that’s purchasing a second home, or a buy-to-let investment property, you are subject to a 3% SDLT surcharge. This also applies to any overseas-based purchaser buying a property in England or Northern Ireland for investment purposes.
This surcharge remains. However, the new threshold of GBP 500,000 does apply. So, until the end of March next year, property investors can buy any residential property below GBP 500,000 and will simply pay the 3% SDLT surcharge.
However, these changes only applies to residential property, not purpose-built student accommodation.
What do the changes look like?
To really illustrate how significant these changes are, here’s how the new SDLT rates compare with the previous rates:
SDLT rates in England and Northern Ireland prior to the new holiday announcement
New SDLT holiday rates – effective until March 31st 2021
(Please note: higher rates of SDLT may apply when a property is purchased through a corporate entity)
When do these new rates come into effect?
They are effective immediately and will last until 31st March 2021.
SDLT is payable when an individual takes possession of the property once the transaction has legally completed, or when the contract has been “substantially performed”, which is when at least 90% of the consideration has been paid.
So, if you complete your purchase before the end of March next year, or you have paid 90% of the cost before then, you may benefit from the SDLT holiday.
How much could I now save?
Prior to the new changes, if you were a real estate investor buying a property in England or Northern Ireland valued at GBP 499,000, you would need to pay GBP 29,920 in SDLT.
Now, however, the same property would only be subject to GBP 14,970 in SDLT. That’s a saving of just under GBP 15,000.
What happens after the 31st of March 2021?
As things currently stand, from 1st April 2021 the previous SDLT rates will be reintroduced.
However, there’s another reason why overseas investors in particular should consider taking advantage of this opportunity now!
From April 1st 2021, there is scheduled to be an increased 2% surcharge for non-residents when buying residential property in England and Northern Ireland.
SDLT rates from April 1st 2021 for second home/investment property
Let’s help you to capitalise on this opportunity
Amidst the uncertainty created by COVID-19, investing in real estate offers you the opportunity to put your money into a tangible asset that works for those with a long-term view.
And with the new SDLT holiday, there’s never been a better time to own assets in the historically strong and resilient UK property market.
Completing in Q4 2020, Victoria Residence at Crown Street is one of the most in-demand new investment projects in Manchester.
Boasting a prime location within a new masterplanned community in Manchester city centre – one of the UK’s highest-performing investment cities – and premium facilities including a high-floor swimming pool and Royal Garden, Victoria Residence at Crown Street is a breathtaking new development of luxury residential apartments.
Now 98% sold out, the final apartments have just been released. And, based on the starting price of GBP 299,000, you could now save GBP 4,950 in SDLT when buying before the end of March 2021.
Speak to a member of our team to see how we can help you to fully capitalise on the new SDLT holiday.