On 8th July Chancellor, Rishi Sunak confirmed that the Stamp Duty threshold would immediately increase from £125,000 to £500,000, a change that will run until 31st March 2021. The changes apply to all residential purchases and will benefit all types of buyer. Property investor, Rex Ekaireb commented on these changes to Stamp Duty: “These changes are a really positive move by the UK government to get the property sector back on its feet. The industry has been hit so hard by the pandemic that something had to be done to help all those in what is one of the UK’s largest industries for investment.”

Ekaireb continued: “Cutting this tax is a great way to get people transacting in the property market, particularly in the case of first-time buyers, who will otherwise find it incredibly difficult.”

According to the Chancellor, this will reduce the average Stamp Duty bill by around £4,500, a welcome holiday indeed. But despite the changes affecting all types of buyer, there will still be a disparity between what some landlords will pay compared with a standard homebuyer.

Before the Stamp Duty holiday kicked in, the standard SDLT rates looked like this:

Property value Stamp Duty rate

Up to £125,000 0%

£125,001 – £250,000 2%

£250,001 – £925,000 5%

£925,001 – £1.5m 10%

>£1.5m 12%

The threshold was £300,000 for first time buyers, who now of course benefit from the increased threshold like home movers.

The new rates table looks like this:

Property value Stamp Duty rate

Up to £500,000 0%

£500,001 – £925,000 5%

£925,001 – £1.5m 10%

>£1.5m 12%

What About Landlords?

Landlords who are buying additional properties have needed to pay a 3% surcharge on top of the standard rates since April. And, despite landlords benefitting from the Stamp Duty threshold increase, they will still need to pay the 3% surcharge. This means that a landlord purchasing an additional property, classed as owning more than one property, including their main residence will pay 3% Stamp Duty for all purchases between £40,000-£500,000.

Rex Ekaireb said of landlords: “People often forget that if landlords are hit as a result of the pandemic, tenants feel that pinch too. With less income, landlords will have less money to invest in their properties which in itself will help the tenants.”

Rex Ekaireb continued: “Getting the UK’s landlords back on their feet along with the property sector should put the UK on a very strong path towards recovery from this global pandemic, which we all hope to see the back of. By getting the buy-to-let sector back towards recovery other stakeholders and those in the industry benefit to, for example the likes of building acoustic testers throughout the UK, architects and more besides.”

Have The Changes Affected Buy-To-Let?

For landlords whose sweet spot in terms of purchase price is between £125,000-£500,000, the Stamp Duty savings available will spark interest. On a £500,000 purchase that completes before the end of March for example, a landlord will pay 50% less Stamp duty; £15,000 instead of £30,000.

For landlords who tend to buy properties valued up to £125,000, there will be no savings at all, of course meaning the Stamp Duty holiday has no impact on them at all.

So, traditional landlords who are in the market for single lets made up typically of terraced properties and individual flat units for example, won’t look to change strategy as a result of the Stamp Duty holiday.

For landlords who invest in larger properties and projects, they will be on the lookout for the next bargain. The Stamp Duty holiday therefore represents an opportunity to save money on large purchases, such as entire buildings of flats, buildings ripe for conversion, large renovation projects and HMOs (houses of multiple occupation).

It could also present an opportunity for groups of smaller landlords to team up to take on a large project by pooling their resources to take advantage of the holiday while it lasts.


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