A stamp duty holiday will begin immediately and run until 31 March 2021, chancellor Rishi Sunak has announced in his Summer Statement.
Mr Sunak, speaking in the House of Commons on Wednesday, revealed details of the second phase of the government’s economic plan to help the UK recover from the impact of the coronavirus. House transactions have fallen since lockdown began, and the chancellor has introduced significant measures to bolster the housing market.
Chief of these is the confirmation that a stamp duty holiday will be introduced immediately and run until 31 March 2021, which will exempt the first £500,000 of all property sales from the tax.
Reaction to the Announcement of a Stamp Duty Holiday
Housing experts had responded positively to the proposal for a six-month stamp duty holiday reported earlier this week.
However, a point of interest was how soon the stamp duty holiday would be introduced. Concerns had been raised that, for as helpful as the holiday could be for many, including those taking on renovation projects, its impact would be mitigated unless it was introduced immediately.
Mr Sunak’s confirmation that the stamp duty holiday will begin immediately is extremely encouraging for the housing market, as is the fact that the holiday will last slightly longer than six months, running until 31 March next year.
The move could prospectively encourage more families and individuals looking for homes within the upper thresholds of the proposed £500,000 limit, to buy over the next six months.
Responding to the announcement, Claire Lloyd, editor of Homebuilding & Renovating, welcomed the implications that the announcement could have for those renovating a house.
She said: "The stamp duty holiday is great news for potential renovators in the midst of buying or considering a move in the coming months. It could represent a saving of up to £15,000 in some instances — a considerable sum which can instead be invested in your project."
Jason Orme, managing director of Homebuilding & Renovating, described the move as “hugely welcome news for self builders”. Even though self builders only have to pay stamp duty on the price of a plot rather than the finished property, the announcement could incentivise those looking to purchase plots and reduce their initial cash outgoings.
Jamie Johnson, CEO of FJP Investment, added: “I am supportive of the government’s measured approach to stamp duty reform. It will provide financial relief to homebuyers, and particularly, help those wanting to take their first steps onto the property ladder."
What Other Measures Were Announced?
The chancellor also confirmed that the Green Homes Grant scheme will begin in September. The scheme, which will provide homeowners with up to £5,000 to make energy-efficient home improvements such as insulation, comprises a £2bn pledge as part of a £3bn “green” fund to help cut carbon emissions.
A cut on VAT will also be applied on tourism and hospitality related activities from 20% to 5% for six months. However, despite mounting pressure on the government to cut VAT on retrofits, which campaigners say could have several benefits, including supporting the UK’s economic recovery following the Covid-19 pandemic, and help the government meet its net zero carbon emissions target in 2050, Mr Sunak did not confirm this measure in the Summer Statement.
Mr Sunak will next provide an update on the UK economy when he presents the Autumn Budget in October.
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