The government is not considering a stamp duty holiday extension after calls for more time following the latest Coronavirus Tier 4 rules.
With the latest Tier 4 rules there are calls for the Stamp Duty Holiday to be extended beyond the 31 March 2021 deadline giving more time for home movers and first time buyers to complete sales.
There are 30,385 signatures for a parliamentary petition to extend the stamp duty holiday by an additional six months although the government is not considering this measure.
Cases of Covid-19 have exceeded 30,000 per day for eight of the last ten days reaching a record 39,237 on 23 December with Tier 4 rules now applying to 40% of the population in England or 24 million people.
How does stamp duty work?
Stamp Duty Land Tax (SDLT) applies to residential purchases from 1 April 2021 where you will pay from 0% to 12% and an extra 3% tax if you are buy-to-let investor or buying an additional home.
This table shows the level of stamp duty payable based on the property value for standard rates and extra rates (includes the 3% on top) from 1 April 2021.
| Property Values | Standard Rates | Extra rates |
|---|---|---|
| Up to £125,000 | 0% | 3% |
| £125,000 – £250,000 | 2% | 5% |
| £250,000 – £925,000 | 5% | 8% |
| £925,000 – £1.5m | 10% | 13% |
| over £1.5m | 12% | 15% |
The stamp duty holiday is available to any property valued up to £500,000 where the sale is completed between 8 July 2020 to 31 March 2021.
For properties worth more than this you would pay stamp duty of 5% on the portion £500,000 to £925,000, stamp duty of 10% on the portion £925,000 to £1.5m and 15% on any portion over £1.5m.
Older equity release buyers can avoid the expense of stamp duty and stay in their home rather than downsizing, releasing cash using a lifetime mortgage for a loft conversion or conservatory extension.
To benefit from the stamp duty holiday you must purchase by 31 March 2021 and this may be difficult as according to research by Zoopla the time taken from agreeing the sale and completing is just under 100 days.
Zoopla’s findings also show that 54% of sales agreed in January have time to complete and for sales agreed in February only 17% will complete before the deadline.
There are no stamp duty costs to consider by remortgage buyers and they can benefit from the current rise in house prices by releasing capital to make home improvements.
Stamp duty costs for first time buyers
Even when the stamp duty holiday ends you can benefit from an exemption on property values of up to £300,000 applying to the majority first time buyers across the country.
To qualify you must not have owned a property previously, using this as your residential home with no stamp duty on the first £300,000 and 5% on the balance up to a maximum value of £500,000.
If the property value is greater than £500,000 there is no exemption and the standard rates would apply which is a risk for those that cannot exchange by 31 March 2021.
In addition, first time buyers can take advantage of the government Help to Buy Scheme that offers 20% of the property value as an interest free loan available on new build properties only.
You need a deposit of 5% with 75% provided by a mortgage and if you live in London the equity loan can be 40% leaving a mortgage of 55% for properties valued less than £600,000.
What are your next steps?
Call our LCM mortgage brokers if you are a buy-to-let landlord with a property, remortgaging and want the best mortgage deal, buying your first home or you are planning to move home.
For equity release buyers our London City Mortgage advisers can recommend lifetime mortgages allowing you to receive cash from your home to spend on anything or even benefit a family member.
Start with a free mortgage quote or call us and we can take your details. Learn more by using the mortgage cost calculators, property value tracker chart and equity release mortgage calculator.
