Stamp Duty holiday – how much will you save?

Consumers looking to buy a property could save up to £15,000 due to the Government’s stamp duty holiday, which was announced by the Chancellor during his summer statement yesterday.

The temporary removal on stamp duty was announced by Chancellor Rishi Sunak, who revealed that it would be temporarily removed on properties valued to a maximum of £500,000 until 31 March 2021. During his announcement, the Chancellor stated that the stamp duty cut would save the average house buyer £4,500.

To find out how much consumers will really save, we have looked at the different types of house buyers and how the stamp duty holiday will impact their costs.

For residential properties in England and Northern Ireland, purchased between 8 July 2020 and 31 March 2021, stamp duty will only be applied on homes valued at £500,000 or over. The below table shows the amount that will be charged on properties valued over £500,000.

Source: Gov.co.uk

First-time buyers were already exempt from stamp duty on properties valued up to £300,000 (£500,000 in London). This means that it is only first-time buyers looking to purchase a property valued between £300,000 and £500,000 outside of London who will benefit from the Government’s stamp duty holiday.

Using our stamp duty Calculator, we calculated that under the stamp duty holiday, a first-time buyer outside of London buying a property valued at £310,000 will save £500. Alternatively, first-time buyers purchasing a home valued at £450,000 would save £7,500.

In reality, it is unlikely that many first-time buyers will be purchasing properties above £300,000 and even less likely properties valued between £400,000 and £500,000 – as such it is expected that the stamp duty holiday will offer few first-time buyers savings. In addition to this, as many lenders have been withdrawing mortgages at a 90% and 95% loan-to-value (LTV), first-time buyers with a 10% deposit may struggle to get a competitive mortgage deal until competition returns to the market.

First-time buyers who are currently looking to buy their first home should consider speaking to a mortgage broker, as they will often be able to compete for the most competitive first-time buyer mortgages.

For those who are not first-time buyers, stamp duty was previously added to all properties valued at £125,000 and over. This means that those looking to move home will likely benefit more than first-time buyers from the stamp duty holiday. Indeed, someone moving home to a property valued at £310,000 will save £5,500 under the stamp duty holiday. Meanwhile, someone moving to a property valued at £500,000 will save £15,000 if they buy the property before the 31 March 2021.

Consumers moving home will also benefit from competitive rates available in the moving home mortgage charts. In fact, last month we reported that the average 60% and 80% LTV mortgage rates have fallen since January.