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Temporary Stamp Duty Rates Due To Coronavirus

Last updated: 10th July 2020

Landlords were given a bit of a treat on Wednesday 8th July 2020 as the government unveiled stamp duty changes in a mini-budget to kick-start the economy after 3+ months of lockdown in the UK due to the coronavirus pandemic.

Chancellor Rishi Sunak delivered residential property buyers in England and Northern Ireland a helping hand by increasing the stamp duty threshold to £500,000 until 31st March next year. And while it wasn’t anticipated amongst the media hype, this also applies to buy-to-let property investors.

However, before you start to celebrate, the 3% surcharge on additional properties is still in place – which will obviously still apply to buy-to-let property purchases.

What do the stamp duty changes mean for landlords?

Overnight we were inundated with messages asking for clarity from landlords, so here goes…

With stamp duty we have residential rates, and additional property rates (which is the 3% surcharge). We’ve covered stamp duty in-depth right here.

The residential stamp duty rates now look like this until 31st March 2021:

Up to £500,000 – 0%
£500,001 – £925,000 – 5%
£926,001 to £1.5 million – 10%
£1.5 million+ – 12%

In short, if you were a first time buyer, the above rates would be applicable.

When you buy an additional property, which is applicable to most buy-to-let landlords, you have the normal residential rates to consider, but also a 3% surcharge for all additional properties.

So while the residential stamp duty rates have temporarily changed to the above, the below will still be applicable:

Up to £500,000 – 3%
£500,001 – £925,000 – 8%
£925,001 – £1.5 million – 13%
Above £1.5 million – 15%

So for example if you purchase a buy-to-let property for £250,000 you’ll have to pay £7,500 in fees. If you buy a buy-to-let property for £100,000, you’ll pay £3,000 in fees.

Let’s put this in context:

If you’d have completed on a £250,000 property last week, you would have paid:

Residential stamp duty rate up to £125,000 @ 3% = £3,750

Residential stamp duty rate up to £250,000 @ 5% = £6,250

Total = £10,000

Today and until 31st March 2021, your calculations would look like this:

Residential stamp duty rate @ 0% = £0

Additional surcharge @ 3% = £7,500

Total = £7,500

Saving = £2,500

So, for those looking to add to their property portfolio between now and March 2021, the Chancellor has handed you some fairly decent savings.

There’s a handy stamp duty calculator here – use this to work out how much you’ll save as a result of these temporary changes. 

For more information, follow the guidelines on the government website here. And if you want to learn more about taxes and how to keep hold of your money, watch this video.

And if you feel now is the right time to chat to someone about making that buy-to-let purchase, you can book a free strategy meeting with our Property Hub Invest team right here.

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