The government's recovery from coronavirus plan

Key property announcements aimed at supporting the property market

The government's recovery from coronavirus plan - key property announcements aimed at supporting the property market
The government's plan for boosting jobs in the UK included measures aimed at helping the residential property market to get moving

On 8 July 2020, the Chancellor of the Exchequer Rishi Sunak delivered the Summer 2020 Economic Update, which included the government's 'Plan for Jobs' and how it intends to boost jobs in the UK. Included in the plan were a couple of property announcements aimed at helping people to move, buy, sell, renovate and improve their homes.

The key property announcements were:

  • A temporary increase in the threshold at which SDLT is payable on purchases of residential property in England from £125,000 to £500,000, which will also apply to the purchase of second/holiday homes where only 3% will be payable; and
  • A £2 billion Green Homes Grant to help homeowners and landlords make their homes more energy efficient.

Stamp Duty Land Tax (SDLT) rates on residential purchases

A temporary 'holiday' on SDLT has been given to purchasers of residential property from 8 July 2020 to 31 March 2021. During this period SDLT will apply to residential purchases at the following rates (taken from the HMRC website):

Property or lease premium or transfer value

SDLT rate

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%

So, if you purchase a residential property during this time, 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. The special rules for first time buyers are replaced by the reduced rates set out above.

Additional (second home) properties

The normal 3% higher rate for purchases of additional properties applies on top of revised standard rates for the period.

Property or lease premium or transfer value

SDLT rate

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%

New leasehold sales and transfers

The nil rate band which applies to the ‘net present value’ of any rents payable for residential property is also increased to £500,000 during the temporary holiday.

Net Present Value of any Rent

SDLT rate

Up to £500,000

Zero

Over £500,000

1%

Companies as well as individuals buying residential property worth less than £500,000 will also benefit from these changes, as will companies that buy residential property of any value where they meet the relief conditions from the corporate 15% SDLT charge.

On the 1 April 2021 the reduced rates shown in the above tables will revert to the rates of SDLT that were in place prior to 8 July 2020.

If you require advice on any of the issues raised in this article, please contact our Residential Conveyancing Team on 01733 882800 or email info@hcsolicitors.co.uk.

Author: Pippa Woodcock, Senior Conveyancing Executive

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This article has been prepared for general interest and information purposes only; it does not constitute legal advice and should not be relied on as such. While all possible care has been taken in the preparation of this article, no responsibility for the accuracy and/or correctness of the information and commentary set out in the article, or for any consequences of relying on it, is assumed or accepted by the firm or the authors.