Stamp duty tax changes from Friday as holiday ends - rules from October 1
2021-10-12
Manchester Evening News 29/9/2021
The government cut stamp duty during the Covid-19 pandemic, but it will soon be coming back
Stamp duty will be returning to pre-Covid levels on Friday
As part of its scheme to help buyers whose finances were affected by the Covid-19 pandemic, the government announced a cut to stamp duty.
Originally the tax was supposed to end in March but was extended to October.
The break in stamp duty allowed home buyers to save money by not paying stamp duty on the first £500,000 of a purchase price, saving up to £15,000.
However, from Friday, the rules will start change as stamp duty returns to pre-Covid levels.
If buying a house after October 1, you will have to pay stamp duty after £125,000.
These are the following rates of stamp duty for different price brackets:
• £0-£125,000 - 0 per cent
• £125,001-£250,000 - 2 per cent
• £250,001-£925,000 - 5 per cent
• £925,001-£1,500,000 - 10 per cent
• £1,500,001 and over - 12 per cent
The government also provides its own calculator so you can figure out how much stamp duty you will have to pay on your purchase, it can be found on their website.
How this may affect the housing market and mortgages
Mortgage have dipped to their lowest levels since last year
Despite the break in stamp duty, mortgage approvals for homebuyers have dipped to their lowest levels in a year.
There were 74,453 approvals for house purchases, marking the lowest figure since July 2020 – the month that a temporary stamp duty holiday was put in place.
Despite the dip, approvals remain above pre-February 2020 levels, the Bank’s Money and Credit report said.
Simon Gammon, managing partner at Knight Frank Finance, said: “Borrowing remains well above pre-pandemic norms, and current levels of activity suggest it will remain so throughout the autumn.
“Mortgage rates on the high street have continued to edge down, though the trend of banks undercutting each other that we’ve seen during recent months has given way to them simply matching each other. That suggests the mortgage war is beginning to peter out.
“Instead, we’re seeing lenders loosen criteria in order to bring in new customers.”
Jeremy Leaf, a north London estate agent and a former residential chairman of the Royal Institution of Chartered Surveyors (Rics), said: “As always, mortgage approvals are a good lead indicator of purchasing intentions.
“However, because they reflect decisions made in the period leading up to August, they show demand remaining relatively healthy even though the final stamp duty holiday and furlough deadlines were looming large.
“We are finding that activity has reduced since but certainly not fallen off a cliff, so expect fairly consistent mortgage approval numbers for the rest of the year at least.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “August proved to be quieter for the housing market compared with the relative frenzy of previous months, with many people putting their property searches on hold and going on holiday.
“Mortgage rates continue to fall as lenders, awash with cash, compete for business, which should help support the market into the autumn.
“Indeed, we are finding that September is proving to be a record-breaking month with plenty going on as buyers continue to search for more space, both inside and out.”
The government cut stamp duty during the Covid-19 pandemic, but it will soon be coming back
Stamp duty will be returning to pre-Covid levels on Friday
As part of its scheme to help buyers whose finances were affected by the Covid-19 pandemic, the government announced a cut to stamp duty.
Originally the tax was supposed to end in March but was extended to October.
The break in stamp duty allowed home buyers to save money by not paying stamp duty on the first £500,000 of a purchase price, saving up to £15,000.
However, from Friday, the rules will start change as stamp duty returns to pre-Covid levels.
If buying a house after October 1, you will have to pay stamp duty after £125,000.
These are the following rates of stamp duty for different price brackets:
• £0-£125,000 - 0 per cent
• £125,001-£250,000 - 2 per cent
• £250,001-£925,000 - 5 per cent
• £925,001-£1,500,000 - 10 per cent
• £1,500,001 and over - 12 per cent
The government also provides its own calculator so you can figure out how much stamp duty you will have to pay on your purchase, it can be found on their website.
How this may affect the housing market and mortgages
Mortgage have dipped to their lowest levels since last year
Despite the break in stamp duty, mortgage approvals for homebuyers have dipped to their lowest levels in a year.
There were 74,453 approvals for house purchases, marking the lowest figure since July 2020 – the month that a temporary stamp duty holiday was put in place.
Despite the dip, approvals remain above pre-February 2020 levels, the Bank’s Money and Credit report said.
Simon Gammon, managing partner at Knight Frank Finance, said: “Borrowing remains well above pre-pandemic norms, and current levels of activity suggest it will remain so throughout the autumn.
“Mortgage rates on the high street have continued to edge down, though the trend of banks undercutting each other that we’ve seen during recent months has given way to them simply matching each other. That suggests the mortgage war is beginning to peter out.
“Instead, we’re seeing lenders loosen criteria in order to bring in new customers.”
Jeremy Leaf, a north London estate agent and a former residential chairman of the Royal Institution of Chartered Surveyors (Rics), said: “As always, mortgage approvals are a good lead indicator of purchasing intentions.
“However, because they reflect decisions made in the period leading up to August, they show demand remaining relatively healthy even though the final stamp duty holiday and furlough deadlines were looming large.
“We are finding that activity has reduced since but certainly not fallen off a cliff, so expect fairly consistent mortgage approval numbers for the rest of the year at least.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “August proved to be quieter for the housing market compared with the relative frenzy of previous months, with many people putting their property searches on hold and going on holiday.
“Mortgage rates continue to fall as lenders, awash with cash, compete for business, which should help support the market into the autumn.
“Indeed, we are finding that September is proving to be a record-breaking month with plenty going on as buyers continue to search for more space, both inside and out.”
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