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Michelle Monck

Consumer Finance Expert
Published: 06/07/2020
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It is reported that the Chancellor of the Exchequer, Rishi Sunak will announce this week changes to the levels of stamp duty paid on property in England. The announcement is expected to remove stamp duty on properties up to a value of £500,000 for between six months to one year. First-time buyers already enjoy stamp duty relief and do not need to pay stamp duty on their first property purchase up to £300,000 (£500,000 in London).

This new reduction aims to get the people of England moving again, following three months of house market stagnation due to the Coronavirus lockdown. However, factors such as a lack of mortgages at higher loan-to-values (LTV) and a backlog of valuations also need to improve to help unlock the housing market.
It is not yet clear if those purchasing a holiday let or a buy-to-let property will also receive a reduction in stamp duty. Currently, property landlords pay stamp duty on properties from £40,000 plus an additional 3% on each stamp duty tax band. A further saving on stamp duty could help those savers considering buy-to-let, due to it potentially generating better returns than the historically low rates currently available on standard savings accounts.

What has happened to the housing market during lockdown?

During the Coronavirus lockdown, the housing market had its brakes applied. Moving home was heavily restricted, reducing the numbers of house sales completing. Surveyors were unable to access properties to complete valuations and those employees at lenders usually responsible for processing mortgage applications were heavily diverted to provide mortgage payment holiday services and help with day-to-day operations. Lenders also started to reduce the availability of mortgages, particularly at higher LTVS.
The result has seen house price growth turn negative and a 1.4% fall in house prices in June 2020 compared to the prior month. The number of residential property transactions in May 2020 compared to last year has halved, while mortgage approvals for the same period have slumped 86%.
The Chancellor’s potential removal of stamp duty on properties worth up to £500,000 is hoped to stimulate demand and bring more house buyers into the market.

How much could house buyers save with no stamp duty?

Home movers can expect to save £2,500 on a house valued at £250,000, for example, while those looking to purchase a £350,000 house will save £7,500. Those looking to buy a new home can use our stamp duty calculator work out how much they could save with the new changes.

Those considering moving home who have an 80% or lower LTV will be able to find a number of attractive mortgage deals. Meanwhile, those seeking a 90% LTV or higher will struggle unless they can find a guarantor to help boost their deposit.


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