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Plus, everything you need to know about the latest Stamp Duty cut!

Britain’s housing market has experienced a post lockdown ‘mini boom’ in response to the recently announced Stamp Duty Holiday. Great news, or so you’d think.

According to latest figures from Rightmove, the Stamp Duty Holiday has driven house prices across Britain to a record high! The average property price on the web portal this month came in at £320,265 – that’s an increase of 2.4% on company’s record, previously set in March. Prices in London also saw an increase of 0.5%, which is also a decent sized jump considering its notoriously steep property prices.

Going by these figures then, you’d assume now is an ideal market for sellers, especially those looking to sell their house quickly. Now, while for the most part this is true, it's important to consider how the Stamp Duty Holiday will affect not just the current market, but also it's condition down the line.

Is there something particular about the Stamp Duty Holiday or Stamp Duty itself that you want to know?

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What is the Stamp Duty Holiday?

The stamp duty holiday was announced by the Chancellor, Rishi Sunak, on 8th July 2020, to stimulate growth in the UK housing market.

The move raised the stamp duty threshold to £500,000 across England and Northern Ireland, with a reduced rate for purchases above. The holiday will last until 31st March 2020 and is expected to cost the government £3.8bn.

What is stamp duty?

In short, Stamp Duty, otherwise known as Stamp Duty Land Tax (SDLT), is a property transaction tax that you pay when purchasing property or piece of land across England & Northern Ireland.

Payment of Stamp Duty is required within 30 days of completion and applies whether the property you’re purchasing is leasehold or freehold and purchased with cash or a house repayments.

For those moving to Wales, Stamp Duty is slightly different. Discover more about the effects of the Stamp Duty on the Welsh property market here

And if you’re buying in Scotland, click here to learn about the Scottish equivalent - Land and Buildings Transaction Tax.

Who pays Stamp Duty?

Whether you pay Stamp Duty or not is dictated by both the Stamp Duty Threshold and what type of buyer you are.

You’ll pay Stamp Duty if…

  • You purchase a property in place of your previous one (Don’t worry, this doesn’t include redoing house payments.)

  • You make a purchase worth more than the Stamp Duty Threshold.

  • You’ve previously sold a property and are living with family & friends while you make a purchase.

  • You marry your partner and buy a property together (even if one of you is a first time buyer!)

  • You buy a shared ownership property.

  • You’re a first time buyer purchasing a property that exceeds the Stamp Duty Threshold.

  • You get added to a property’s house repayments deeds (This is considered buying a share in the property)

  • You’re purchasing a non-residential property worth more than 150k.

  • You buy a mixed-use property or piece of land for over 150k.

It’s worth noting that you can also occur a Stamp Duty surcharge if you're…

  • • Purchasing a second home.

    • A private landlord buying a buy-to-let.

    • Purchasing a buy-to-let through a limited company.

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How have Stamp Duty rates changed?

To help you get your head around these latest changes to Stamp Duty, we’ve outlined each band and the associated costs below…

Charge BandDuring the Stamp Duty Holiday
Up to £500,0000%
£500,001 - £925,0005%
£925,001 - £1.5M 10%
Over £1.5M12%
Charge BandAfter the Stamp Duty Holiday
Up to £125,0000%
£125,001 - £250,0005%
£250,001 - £925,00010%
Over £1.5M12%

NOTE: Additional properties purchased for less than £40,000 are subject to 0% tax. Second homes above £40,000, up to £500,000 are subject to 3% Stamp Duty.

To put these latest Stamp Duty bands into context and show how they can impact you, jump into the scenario below.

Let’s say you’re after a property that’s worth £600,000. Before the Stamp Duty Holiday you would pay £20,000 in Stamp Duty.

Whereas during the holiday, the same house would set you back just £5,000 in Stamp Duty costs - 5% on the £100,000 that comes in above the threshold.

Can I get a Stamp Duty refund?

To claim a refund you need to be eligible. This means you either need to…

A. Have sold your previous property within the last 3 years.

B. Claim your refund within 3 months of the sale, or 12 months within the date of your SDLT tax return.

To complete your tax return you must download an SDLT return form from the Government website and send it back through the post. You can also use a solicitor or legal conveyancer to carry out the return if you wish.

Why won’t this ‘mini boom’ last?

While there’s no denying that the Stamp Duty Holiday has kept the market buoyant during this challenging time, we’re not entirely convinced that it’s here to stay.

A 2.4% increase in property prices is great - it’s evidence there are lots of properties coming onto the market – but it isn’t evidence of is how many are actually selling.

Neither does it show what price these properties are selling for, which for most of us is the most important aspect of any sale.

It’s also worth considering the long term implications. Come March 31st 2021, when Stamp Duty threshold returns to its usual rate, buyers will have a considerably smaller budget to play with.

A factor likely to influence house prices and potentially see them fall, in an effort to maintain good levels of interest. Proof in itself that properties, whether they're a neglected town house up in Yorkshire or a cute cottage in the Cotswolds, are only worth what a buyer is willing to pay.

Don't believe us? Get a couple of agents out to value your property and chances are their final figure will differ.

Top Tip: Before you do so, read up on all their tricks here!

As you can also imagine, going on to the open market in such an unstable climate is actually quite a risky strategy. Especially when you consider the amount of competition you'll have, with the amount of new property listings continuing to grow.

Not ideal if you want to sell your house fast to take advantage of the recent Stamp Duty cut. If a fast hassle-free sale with a speedy completion is what you're after, then we may be able to help...

As a trusted cash buyer with over 50 years combined experience in buying property, we’ll buy your home in cash and guide you through exchange and completion in as little as 7 days!

Not only will this ensure that you can make most of the Stamp Duty Holiday, but it’ll also give you the upper hand in any onward negotiations (plus cash buyer status!), potentially saving you even more money in the process.

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Joe McCorry

Joe is our SEO Specialist that helps produce and develop content. He enjoys finding out about all the new property trends and learning about the property market.