Stamp Duty Holiday - Extension Expected, saving £££s for Landlords
Next week, Rishi Sunak will deliver his eagerly awaited second budget as Chancellor of the Exchequer. The media is speculating that there will be a three-month extension of the stamp duty holiday in England and Northern Ireland, taking us to the end of June 2021.
Although the initial announcement was designed to help boost sales in the private housing market, the stamp duty holiday has also brought extra benefits for buy-to-let landlords and those looking at buying a second property. The temporary tax break on buying new properties, which amounts to a tax saving of around £15,000, is an attractive option for many property investors.
The idea behind the possible extension is to help buoy the housing market while the government works on easing the current COVID-19 restrictions. And although landlords and property investors will still need to pay a 3% surcharge on any second home purchases, those purchasing a property below £500,000 will pay no extra duty – good news for property investors looking to expand their property portfolio.
A report by the ONS estimated that as a result of the tax cut, UK house prices climbed by 8.5% in 2020, the highest annual growth rate since October 2014. Average house prices were pushed up to £252,000 as keen buyers looking to save money rushed to beat the end of the stamp duty holiday.
Figures released by HMRC also show that 98,830 housing transactions were completed in January 2021 – 21% higher than the average for the same month over the past five years. Whether this growth can be sustained in the long-run as the country recovers from the effects of COVID-19 remains to be seen.
For property investors wanting to take advantage of a possible extension next week, the biggest benefits will come from increasing portfolios on mid-level properties. We’ll be watching the announcement with interest to see how it impacts buy-to-let property investors.
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