SDLT is a tax payable on the purchase of property in England and Northern Ireland (different rules apply in Scotland and Wales). It is paid where someone:
- Buys a freehold property
- Buys a new or existing leasehold property
- Buys a property through shared ownership
- Takes ownership of land in exchange for payment, for example by taking on a mortgage or buying just a share in a house
The amount of SDLT paid depends on the purchase price of the property and whether the buyer owns (or has owned) any other property. The Chancellor has announced that the SDLT rates are changing. If someone buys a residential property between 8 July 2020 to 31 March 2021, they will only start to pay SDLT on the amount paid for the property above £500,000. These rates apply whether they are buying their first home or have owned property before.
This is a significant change because most property purchasers will benefit. The SDLT holiday is not limited to home owners or first-time buyers – buy to let investors and property traders will also be able to take advantage of the reduced rates.
This will no doubt provide a welcome boost for the property market. Estate agents are reporting a significant increase in viewings following the announcement. However, property purchasers will still need to plan properly. Over 8 months seems like a long time to move house. But the market is still fragile and as the employment market falters, some will find it difficult to secure a mortgage.
So, anyone thinking about taking advantage of this tax giveaway should start to plan now and that should include instructing a conveyancing solicitor to ensure that all of the preparatory work is done as early as possible.
Some home owners will feel aggrieved - if their purchase completed before 8 July 2020, they will not benefit and will not be able to claw back any of the SDLT that they have paid.
Those wishing to move should also remember that, in the main, the reduced SDLT rate will not apply where completion of the transaction happens after 31 March 2021. The SDLT holiday will probably lead to a huge number of transactions in the run up to the deadline – so the conveyancing and lending process may be severely impacted at this point. Move early might be a good idea!
To discuss this or any other property matter, contact us.