In his budget announcement today, the Chancellor cut the tax on property valued under £500,000 in order to give buyers much needed relief amid the coronavirus pandemic. This cut will last until March 31 next year in England in order to boost the property market which has only just begun to recover from the pandemic. Mr Sunak’s bold decision has seen a 22 percent surge in enquires on UK property website Rightmove as buyers look to push through with purchases.
Commenting on the move, Rightmove’s property expert Miles Shipside said: “This move will help to keep the nation and wider economy moving because keeping the current momentum going will help prevent destabilising falls in property prices as unemployment grows, and enable a quicker economic recovery.
“Lockdown prevented 175,000 would be sellers from coming to market so we hope this Stamp Duty holiday will provide the spur for those missing movers to come to market.
“They will find there’s currently record demand for their properties from prospective buyers, with Rightmove enquiries to agents now double what they were before lockdown.
“Home-movers will be grateful that the changes come into effect straight away so they don’t have to delay their plans, and what we could see now is people rushing to get a price agreed before some sellers put their prices up in the hope people will be able to pay more because of the tax savings.”
The cut on stamp duty will come into place immediately in England and Northern Ireland.
Before the cut on stamp duty, the threshold stood at £125,00 or £300,000 for first-time buyers.
Before the relief, houses valued at £125,001 to £250,00 the stamp duty stood at two percent of the value, which increased to five percent for those between £250,001 to £925,000.
The stamp duty does depend on which region the property purchased is in, however.
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For example, Rightmove reported London’s average house price to be £628,284, meaning the stamp duty saving would stand at £15,000.
In the north east, however, where house prices are on average £157,291, savings would be £646.
According to Her Majesty’s Revenue & Customs (HMRC), stamp duty accounts for £12billion of the Government’s annual tax revenue.
It is now estimated the nine-month holiday could cost the Treasury up to £3.8billion.
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Rightmove also reported there are 510,000 properties across the UK which are under £500,000 with 291,000 properties currently up for sale on the site.
The Chancellor also claimed by cutting the tax, it would protect jobs in construction and encourage homeowners to invest in their homes.
According to statistics from HMRC, property sales were down 52 percent in May when compared with this time last year.
Due to the COVID-19 pandemic, property sales also dropped to 37,000 in April – a record low.
Also within his budget speech, Mr Sunak once again insisted the furlough scheme, which has supported millions of jobs, will end in October.
He did add a new bonus scheme for employers whereby they would be given £1,000 for every worker brought back to the workplace and kept on until January will now be established.
Announcing the move he said: “Our message to business is clear – if you stand by your workers, we will stand by you.”
Other measures also included a reduction in VAT to five percent in the tourism and hospitality sectors.
While a new £500million discount scheme will be issued whereby costumers are given 50 percent off meals when spending £10 or more.
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