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Stamp Duty: All You Need To Know

September 8, 2021

Stamp Duty: All You Need To Know

At the moment, it can seem as though buying a house in the UK has never been more of a hot discussion topic! With huge changes rocking the UK property market in recent years, changes as a result of Brexit and Covid-19, and key impacts to the way that mortgages are offered, it can be complicated to know your exact position when it comes to buying a new property.

Stamp duty is something that can trip up even the most experienced of homeowners. Particularly tricky for first-time buyers, stamp duty is a type of tax which is paid on property purchases here in the UK – but recent stamp duty ‘holidays’ have seen a pause on payments of this type in an effort to stimulate the economy and property market during the slump wrought by Covid-19. Learn everything you need to know about stamp duty, with Buying Agent Partnership.

What is stamp duty?

As we’ve mentioned, stamp duty, formally known as Stamp Duty Land Tax (SDLT), is a type of tax which is to be paid against the purchase of property in the UK. Typically, stamp duty is paid at a fixed rate depending on the purchase price of your property and when you bought it.

What was the UK’s stamp duty holiday?

The UK’s most recent stamp duty holiday was introduced in order to stimulate the economy  – and the property market – during the Covid-19 pandemic. The stamp duty holiday on purchases in England and Northern Ireland halved at the beginning of July to only cover the first £250,000 of property prices, before tapering to a close, up at the end of September. The stamp duty holiday has already ended in Wales and Scotland.

What has happened to UK housing prices as a result of changes to stamp duty?

Despite the phasing out of the UK stamp duty holiday, recent reports suggest house prices have continued to climb thanks to a combination of cheap borrowing costs, and continued difficulties with supply paired with strong demand.  Nationwide’s latest statistics report a growth in UK house prices, a rise of 11.0% in the last 12 months, up from 10.5% in July 2021.

This means that, in conjunction with the stamp duty holiday tapering to a close, UK house prices are now around 13% higher than March 2020 – as repeated restrictions and lockdowns have driven demand for gardens, open spaces and larger homes better suited for home-working.  In many cases the price increases will have outweighed any stamp duty savings!

What stamp duty do I need to pay?

Stamp Duty is usually paid on increasing portions of the property price when you purchase residential property. SDLT only applies to properties over a certain value, so it’s important to work out what you need to pay.

The amount of stamp duty to be paid depends on the following:

  • when you bought the property
  • how much you paid for it

Current residential property rates of stamp duty can be found on the UK government website, which can help to give you a rough estimate of the amount of stamp duty you’ll need to pay. To calculate how much stamp duty you’ll need to pay, you can speak to one of our trusted advisors or you can calculate using a handy online stamp duty calculator.

Do I Pay Stamp Duty On A Second Property?

Wondering whether you pay stamp duty on a second property? We’re here to help. Many of our clients are looking for a holiday let, a second home or an investment property – and stamp duty is calculated differently for second homes.

If you are buying an additional property, then you’ll pay stamp duty of 3% at the lowest band (and higher rates above this value).  If you are a non-UK resident, as many of our clients are, you will also pay a 2% surcharge from 1st April, 2021 – so it’s important to check the details. 

So, should I buy a house right now?

A question which can often naturally result from stamp duty conversations and calculations is ‘Does that mean I should buy now or not?’. For our experts’ analysis of the UK property market right now, see our latest blog on the topic or get in touch with our property finders for more information.

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