From 8 July until 31 March 2020, the SDLT 0% band has been increased from £125,000 up to £500,000. Thereafter the old rates apply. Therefore, if buying at £500,000 you now pay no SDLT at all. Previously this would mean paying £15,000 in tax.
The same saving applies when buying at more than £500,000.
Investors buying residential property still have to pay the additional rate of 3%, but there is still a substantial saving for them.
How has this affected the local property market? This will stimulate the residential property market as intended. Since the announcement it is clear that buyers have rising confidence to commit to buying new homes. There has been increased activity and as a result, professionals involved in the house buying process are now much busier.
There are also several beneficial knock-on effects from this. Developers can sell their stock quicker and will need to replenish this with new land acquisitions. This in turn will lead to the construction industry getting busier.
Moving to a new home is also a great stimulus for the high street. When people move home they buy new carpets, curtains, white goods etc.
Although this could be seen by some as a tax give-away, it will lead to more taxes being raised in VAT on solicitor and estate agent fees and on the goods purchased to furnish new homes.
It remains to be seen how this change will affect the property market from April 2021 onwards. It takes some months for the average house move to take place so house buyers should not leave it too late to commit to buying a home.