How Can Stamp Duty Holiday Benefit Investors?
Last summer, Chancellor Rishi Sunak announced a temporary stamp duty holiday that saw the rate of stamp duty cut to 0% for all properties under £500,000. However, this offer is only valid until the end of March, which means investors need to act fast in order to take advantage of the unique benefits this brings.
What is the Stamp Duty Holiday?
Traditionally, all properties over £125,000 would require the buyer to pay a percentage of the property for the Stamp Duty Land Tax. This percentage changes depending on the overall price, with current rates for first-time buyers set at:
0% for properties up to £125,000
2% on the next £125,000 (so the portion between £125,001 and £250,000)
5% on the next £675,000 (£250,001 to £925,000)
10% on the next £575,000 (£925,001 to £1.5 million)
12% on everything about £1.5 million
For those buying a second property, then an additional 4% is added to each band. However, with the COVID-19 pandemic seeing the housing market slow down, the chancellor introduced a Stamp Duty Holiday. This means first-time buyers will not need to pay any tax on properties under £500,000 if completed before March 31st. The chancellor has also announced a cut for investors looking to purchase an additional property, with them only paying 3% for properties up to £500,000.
This move to reduce stamp duty for properties is expected to cost the Treasury up to £3.8 billion by the time the scheme ends in March.
What does this mean for investors?
With the stamp duty holiday in place until March 31st, it has given a fantastic opportunity for investors to maximise their opportunity and save thousands of pounds. The holiday is not a new idea, with a similar scheme used to great success following the 2008 financial crisis.
While primarily aimed at helping first-time buyers, the cuts are also helping investors purchasing a buy-to-let or second home. Estimates suggest that on average, buyers will be saving £4,500, and this incentive has helped bolster the market. Hundreds of investors re-enter and take advantage of the money-saving benefits, with Right Move seeing a 22% increase in visitors following the announcement.
However, with the deadline looming investors need to act quickly in order to take advantage and save money. Although there are increasing calls on Rishi Sunak to extend the stamp duty holiday or create a tiered solution back to normal. Buyers only pay stamp duty tax when they have completed, and there are many industry experts asking the chancellor to allow those who have exchanged, but not completed, by the deadline the ability to enjoy these benefits.
However, this is looking increasingly unlikely, so investors need to act fast if they are to save money.
Want to take advantage of the stamp duty holiday?
Are you looking to take advantage of the stamp duty holiday before it ends on March 31st? Here at Elite Realty Investment, our team is here to help you unlock the very best properties and investment opportunities in the UK.
Our team has over two decades of experience in the property investment market, and we know how complex purchasing a new property can seem. That is why our mission is to help you enjoy a stress-free and smooth process throughout. We only work with premium developers and off-market schemes, ensuring you can enjoy the best investments with the highest net rental return.
Want to find out how we can help you? Get in touch with our team today!