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The Chancellor of the Exchequer, Rishi Sunak recently announced a temporary holiday on stamp duty on the first £500,000 of all property sales in England.

This means any property purchases below the new level of £500,000 will not need to pay stamp duty as long as the transaction is completed before 31 March 2021.  The changes come in with immediate effect.

The move is aimed at helping buyers who have taken a financial hit because of the coronavirus crisis.  It is also intended to boost a property market hit by lockdown.  Prior to this announcement, stamp duty was paid on land or property sold for £125,000 or more.

The nine-month stamp duty holiday will cost the Treasury an estimated £3.8bn.

Chancellor Rishi Sunak said “The average stamp duty bill will fall by £4,500. And nearly nine out of 10 people buying a main home this year will pay no stamp duty at all.”

While this is a welcome change, and one that will no doubt help to boost the property market, at this stage, there are some ambiguities.   While any transaction needs to complete by 31st March 2021, it is not clear as to whether this means ‘exchange’ or ‘completion’.

It also does not change the situation with surcharges.  People buying second homes and buy-to-let properties will also benefit but will still have to pay the 3% extra stamp duty due on the entire purchase price. Therefore, for any purchase between 8 July 2020 and 31 March 2021, the first £500,000 would have no stamp duty on it, but the 3% surcharge still applies. For example, if you were buying a flat for £225,000 the duty will have gone down from £8,750 to £6,750

The stamp duty holiday applies from 8 July, which means anyone completing a property purchase before that date will have to pay the full normal stamp duty.

As you would expect with the law, there are subtleties so in some cases the relevant date will be before legal completion.

Further official government guidance can be found here.

We will post further updates as they occur.  In the meanwhile, if you would like any advice on buying and selling residential property, please contact Emma Liddle, Head of Residential Conveyancing on 0191 281 6151 or email eliddle@mincoffs.co.uk.

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