Great time for property investment as the UK Government alter the SDLT rules

Posted by tungstenmg
Last updated 13th July 2020
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  • How will the SDLT reduction affect you?

    How will the SDLT reduction affect you?

    From 8 July 2020 until 31 March 2021 the UK Government has removed Stamp Duty Land Tax (SDLT) for property purchases up to £500,000. The decision is based on the huge impact that Covid-19 has had on the UK economy. The great news is that these change apply to first time buyers and those you have owned property before.

    If you are purchasing a property up to £500,000 there is no SDLT to pay. If you are purchasing a property above £500,000 you only pay SDLT on the amount over £500,000. Check out this grid from the gov.uk to explain further

    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%

    The huge impact I expect the UK Government wish to happen is that the cogs of one of the UK’s most important industries begin to turn again. As the SDLT barrier is removed there should be in theory more purchases as more properties become affordable. This will then have a knock on effect to the industry as a whole as trades can start renovations on new projects, the removal companies have belongings to move, the solicitors have conveyancing to oversee and surveyors have properties to evaluate.

    SDLT UK temporary reduced rates
  • The construction sector adds £39 billion a year to the UK economy. Rishi Sunak

  • How will the changes affect property investment done via a company?

    The fantastic news for those involved in property investment is that we have not been forgotten. If you are to purchase a property in a company until 31st March 2021 you can benefit from a reduced SDLT and the table below shows this

    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%

    Rishi Sunak confirms stamp duty ‘holiday’ on homes up to £500,000
  • Housebuilding alone supports nearly three quarters of a million jobs. Rishi Sunak
  • What are the pros and cons for the UK Government collecting less stamp duty?
    • Increase purchases
    • A huge part of the UK economy can start to operate
    • Positive knock on effect to other industries such as builders, solicitors, architects, estate agents
    • Investment companies can start to create more private sector housing that is highly demanded
    • Open up properties to those who were unable to afford them before this reduction
    • As unemployment rises and job security is threatened will buyers wish to move
    • Buyers unable to secure mortgages with less lower end mortgage products attainable
    • Hard to view properties due to continues isolation of some sellers
    • Property investment companies are able to purchase stock from those buying in their own name
    • How will the government fill the £8.4 billion revenue loss from SDLT (based on residential sales in 2018/19)
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