The stamp duty holiday has been a hot topic in the property market in recent times. If you are in the process of buying a house or are planning to buy one soon, you might be wondering whether you qualify for the discount.
In this article, we’ll look at who is eligible for the stamp duty holiday and who isn’t so that you know exactly where you stand. We’ll also look at what other help or support is available that might help you get onto the property ladder.
What is the stamp duty holiday?
The stamp duty holiday was unveiled by the chancellor in July 2020. It was introduced to boost the property market which had stalled due to the effects of the first lockdown.
Under the stamp duty holiday rules, homebuyers in England and Northern Ireland do not have to pay tax on the value of a property up to £500,000, rather than the usual £125,000.
This means that people can save up to £15,000 in stamp duty when buying a house.
This is money that could be used to increase the size of your deposit in order to get a better mortgage deal. Or you might use it for other expenses like home improvements or home insurance.
The stamp duty holiday was originally due to end on 31 March 2021. However, it has been extended until 30 June to give buyers more time to complete purchases.
After that, the starting rate for stamp duty will drop to £250,000 until the end of September. It will then return to the usual limit of £125,000 at the beginning of October.
Who is eligible for the stamp duty holiday?
Anyone who completes a property purchase between 8 July 2020 and 30 June 2021 is eligible.
You won’t pay any stamp duty provided the property:
- is your main residence
- is located in England or Northern Ireland
- costs £500,000 or less
Second-home buyers as well as those purchasing buy-to-lets will also be eligible for the stamp duty holiday. However, they will have to pay the 3% surcharge that has always been in place for these kinds of properties.
Who is not eligible?
If you completed your purchase before 8 July 2020, you are not eligible for the stamp duty holiday.
Considering that the stamp duty holiday was introduced to help buyers during the pandemic, this will no doubt be particularly galling for those who completed purchases under the strain of lockdown but just before the holiday kicked in.
Stamp duty is calculated after completion. So, if you exchange contracts before 30 June but don’t complete until after this date, you won’t benefit.
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What other help is available for homebuyers?
The chancellor also announced a new mortgage guarantee scheme when delivering the Budget.
The scheme aims to help buyers to purchase property with just a 5% deposit. The government will then provide a guarantee to lenders for the remaining 95%. The scheme is available for properties worth up to £600,000.
If you are a first-time buyer, you can get onto the property ladder with just a 5% deposit through the Help to Buy: Equity Loan scheme.
Under the scheme, the government will loan you up to 20% of the property value (40% in London) to boost your deposit. The loan is interest free for the first five years and you can pay all or part of it off any time.
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