The government is currently making new plans that could see the stamp duty threshold temporarily raised from £125,000 to between £300,000 and £500,000.

Chancellor Rishi Sunak has hinted that he is changing the laws surrounding stamp duty, and announced a six month stamp duty holiday during the economic uncertainties caused by Covid 19. This comes as part of the Summer Economic Update which is likely to see the stamp duty threshold temporarily raised from £125,000 to between £300,000 and £500,000. Stamp Duty tax is the property transaction tax that currently does not affect any first-time buyers; if the property is under £300,000 in the UK and £500,000 in London.

The main aim of the scheme is to help people who have been financially disadvantaged and are unable to maintain their business or finances during these difficult times. The Chancellor is set to unveil the holiday as part of his mini-budget. This is set to be announced on July 8 in the House of Commons. The change in stamp duty came to light following the difficulties within the housing market. During March and April, the property market had greatly been affected as house prices began falling and there were less investments due to the uncertainties of the pandemic. In a recent poll for Nationwide, house prices fell by 1.7% which had been the biggest drop seen in 11 years since the recession. HM Revenue and Customs figures also unveiled a worrying blow, that sales of homes in April fell to their lowest-ever in recorded history.

Will it affect me?

It is believed that the average house price in the UK was £248,000. For any first time buyers, you would not have to legally pay the stamp duty which is due to the tax relief. If a first time buyer was to purchase a home that was worth over £500,000 threshold then they would save £10,000 in stamp duty.

Homeowners who bought a property to the value of £248,000, they would save £2,460 on stamp duty as long as the increased threshold is legally enforced. Timer Aboody, Director of Finance states that he does not believe the laws are going far enough to help those who need assistance. Properties that are as high as £1million plus, are being hardest hit, which may hinder the industry further. If the laws were to be changed further, it could allow business to thrive and sales to restart.

Tom Bill, head of the UK residential research at Knight Frank spoke of the benefits of financial relief and that first time buyers would also feel the benefit. “The government understands that moving house has far-reaching benefits for the UK economy and this may form part of a wider re-think of property taxation that recognises this strategically important role.” He says.

For those interested in investing in the property market, this new easing of the law could be very appealing. It essentially means that those who are wishing to get their first steps on the property ladder could now find the minimum deposit at 5 percent, instead of 15 percent.