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What happens when the stamp duty holiday ends?

With just four weeks left until the stamp duty holiday deadline, time is getting tight for buyers to complete by the June 30th deadline. We look at what lies ahead for stamp duty and what to plan for in the months ahead.

3 minute read

stamp duty holiday

Buyers rush to complete their home purchases to save themselves up to £15,000 to take advantage of the stamp duty holiday. In fact, new data suggests that half of properties put up for sale since the holiday was extended in March have sold in a month. Under the current holiday scheme, you don’t pay stamp duty on properties worth up to £500,000 in England and Northern Ireland.  Different thresholds apply in Wales and Scotland. 

But what happens if you are not going to complete by June 30th?  We look at what rates to expect generally, and what this means if you are a first time buyer, buying an additional property or buying a property from abroad.

Reduced rates until 30th September

From the 1st July until 30th September, reduced rates will still be in place if you’re buying a property, so there are still savings to be made. During this time in England and Northern Ireland, no stamp duty will be paid on the first £250,000 of the property’s value, unless it is a second home before returning to £125,000 on 1st October 2021. See our guide for full details on stamp duty rates for England, Northern Ireland, Wales and Scotland.

What happens if you’re buying a second property?

If you are buying a second property, or if you may temporarily end up owning two properties, then you pay the normal stamp duty rate plus an additional surcharge of 3% up to £500,000 (rising to 8%, 13% and 15% at higher bands) in England and Northern Ireland.  This will shift to 3% up to £250,000 on 1st July before returning to 3% up to £125,000 on the 1st October. See our guide to stamp duty for second homes for full details on the rates and bands in England, Northern Ireland, Wales and Scotland.

First Time Buyer Relief

Since 2017 first time buyers paying £300,000 or less for a residential property paid no stamp duty. When stamp duty relief up to £500,000 was introduced in 2020, this meant the first-time buyer exemption had no practical effect. First-time buyers pay 0% on the first £300,000 and 5% on the remainder up to the value of £500,000. There is no first-time buyer relief on properties above £500,000. To qualify as a first-time buyer, you must never have owned or had an interest in a residential property in the UK or overseas.  For full details on stamp duty for first time buyers our guide explains all.

What if you’re a non UK resident?

From 1st April 2021 there is a 2% surcharge on properties bought by overseas buyers. The surcharge is on top of normal stamp duty rates for residential purchases and second homes. The surcharge applies to all ‘non-resident transactions’, even if you intend to live in the property you’re buying, and regardless of whether or not you already own a residential property. To find out more about who the surcharge applies to you and the full rules you can visit the government’s website for more information

What will happen to the housing market?

Many experts predict the market will start to slow as the rush to meet the deadline ends and stamp duty rates start to taper. However, with low mortgage rates, the return of higher loan to value mortgage products and government support with the mortgage guarantee scheme, some are predicting that the market will remain buoyant for at least the next six months. 

Nationwide’s Chief Economist Robert Gardner states: “Our research suggests that while the stamp duty holiday is impacting the timing of housing transactions, for most people, it is not the key motivating factor prompting them to move in the first place.”

So is now a good time to buy or sell?

With the stamp duty holiday ending in five weeks, there isn’t time to complete your sale or purchase if you’ve just started the process.  However, there is still time to benefit from the tapered rates. And, no further stamp duty savings are anticipated after the 1st October, but of course government can always make further changes. 

Remember buying and selling a home can take a frustratingly long time. For a speedy sale, secure your mortgage in principle early and appoint a conveyancer as soon as you start your property search.

Stamp Duty Calculator for England & NI, Scotland and Wales

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