Chancellor unveils Stamp Duty holiday
Caz Blake-Symes • July 9, 2020
The Chancellor has said the average saving will be £4,500.
Chancellor Rishi Sunak has confirmed that the Stamp Duty threshold will be increased to £500,000 immediately until March 31 next year. Sunak confirmed rumours of the Stamp Duty holiday during his summer economic update this afternoon. He said the Government will temporarily increase the nil-rate band of residential Stamp Duty in England and Northern Ireland from £125,000 to £500,000. This will apply from today (July 8th) until March 31 2021.
The Treasury said nearly nine out of ten people getting on or moving up the property ladder will pay no Stamp Duty at all. The aim is to boost the housing market and the wider economy to help the UK recover from the consequences of the coronavirus pandemic. It comes after the property market was effectively closed between the end of March and mid-May.
Agents and portals have said there has been more demand since the market reopened but it is so far unknown if this will transfer into sales. Rightmove said there are more than 510,000 properties with asking prices under £500,000 on the portal, making up 81% of all residential stock for sale in England. The property website said 291,000 properties under £500,000 are currently available for sale, making up 78% of all properties listed in England. It said people enquiring about properties under £500,000 on Rightmove makes up 84% of all buyer enquiries in England.
Mark Peck, head of residential at Cheffins estate agency, said this could provide the incentive many unsure buyers and sellers need. He said: “Whilst the market has already been significantly busy post-lockdown, cutting Stamp Duty on purchases up to £500,000 really will be the catalyst get the industry flying. The most likely impact of this measure will be a flood of buyers coming into the market who previously had sat on their hands due to political and economic uncertainty, and this flurry of activity will bring with it price rises as demand outweighs supply. He suggested it would also boost those with a low deposit as they could now increase it with the Stamp Duty savings.
How much will buyers save?
How much a buyer in England or Northern Ireland could save under the temporary measure will depend on how much the property costs – as a general rule, the more expensive the property, the more you'll save (up to the maximum of £500,000). For example, if you buy a property for £400,000 in England and you're not a first-time buyer, you would usually pay £10,000 (made up of £2,500 on the portion between £125,001 and £250,000, and £7,500 on the portion between £250,001 and £400,000). But for now, you'd pay no stamp duty on the property at all – saving you £10,000. The Chancellor has said the average saving will be £4,500.
What if I've exchanged but not completed?
The requirement to pay stamp duty is triggered when you complete the purchase of the property. So if you've exchanged prior to 8 July but not completed, you'll benefit from the increased thresholds.
Residential Rates on purchases from 8 July 2020 to 31 March 2021
If you purchase and complete on a residential property between 8 July 2020 to 31 March 2021, you only start to pay SDLT on the amount that you pay for the property above £500,000. These rates apply whether you are buying your first home or have owned property before.
You can use the table below to work out the SDLT due:
Up to £500,000 Zero
The next £425,000 (the portion from £500,001 to £925,000) 5%
The next £575,000 (the portion from £925,001 to £1.5 million) 10%
The remaining amount (the portion above £1.5 million) 12%
From 8 July 2020 to 31 March 2021 the special rules for first time buyers are replaced by the reduced rates set out above.
Higher rates for additional properties
The 3% higher rate for purchases of additional dwellings applies on top of revised standard rates above for the period 8 July 2020 to 31 March 2021.
The following rates apply:
Up to £500,000 3%
The next £425,000 (the portion from £500,001 to £925,000) 8%
The next £575,000 (the portion from £925,001 to £1.5 million) 13%
The remaining amount (the portion above £1.5 million) 15%
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Mortgage rates are likely to stay in the 4-5% range this year while changes to affordability testing by lenders could give buyers a boost.
Sky high house prices, high cost of living, student loans and rising rent costs mean that getting on the property ladder is challenging. But the desire to own a home remains strong for many young adults.
Now, the affectionately known ‘bank of mum and dad’ (or bank of other family members) may wish to lend or give money for deposits and other house purchase costs. Our expert Mortgage Advisers will be able to discuss all options available to suit your specific family’s situation.
The Bank of England has voted to reduce the Base Rate by 0.25% for the second time this year, taking it to 4.25%. Base Rate was held at 4.5% in March after it was cut by 0.25% in February.
Adapted from Zoopla’s April 2025 Housing report I mage: The analysis uses average house prices from the house price index and for first-time buyers to assess mortgage payments at different mortgage rates applied to a 30- year mortgage, at different loan-to-values. One emerging trend that we expect to positively support market activity in the coming months is a relaxation in how lenders assess the affordability of new mortgages. While buyers focus on the mortgage rate they will pay, lenders also check whether the borrower can afford a 'stressed mortgage rate' at a higher level than the borrower will pay. While the average 5-year fixed rate mortgage is around 4.5% today, many lenders are currently 'stress testing' affordability at 8-9%. This makes it harder to secure a mortgage without a large deposit. If average mortgage stress rates were to return to pre-2022 levels of 6.5% to 7%, this would deliver a 15-20% boost to buying power. An average first-time buyer with mortgage repayments of £1,020pcm at a 4.5% mortgage rate would typically have to prove they could afford monthly repayments of £1,550pcm at an 8.5% stress rate. If the stress testing is relaxed to 6.5%, repayments would fall to £1,275pcm, boosting buying power. It's a similar pattern for the average homeowner, while the actual impact will vary by lender and type of borrower. This change would consequently supporting demand and sales volumes, helping to clear the stock of homes for sale, rather than boosting house prices. Other existing rules and regulations that remain in place will continue to impact the availability of mortgage finance. Comment from Phil Clark “This is potentially very exciting news and will give borrowers a greater choice of products if these rules are relaxed. Regardless of whether you are a First-time Buyer, Looking to move, remortgage or invest in property, there are a huge range of competitive mortgage deals on the market. I will be delighted to discuss your specific requirements and offer you the most suitable deal!” Please call Phil on 0117 3251511 or email info@swmortgages.com For more information about the Mortgage and Protection products we offer, please visit www.bristolmortgagesonline.com Your home/property may be repossessed if you do not keep up repayments on a mortgage or other debt secured on it.
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