While there has been a strong level of optimism surrounding the property market in recent months, there is still a lot to consider. Brexit remains an ongoing process in the country, and the March Budget is likely to affect the property and rental market.
The change in Chancellor so close to the Budget means there is a bit more uncertainty surrounding what may happen. However, there have been many industry experts discussing what is likely to happen, and it won’t hurt homeowners and buyers to consider what may happen in the forthcoming Budget.
Current rules regarding housing tax
In England, stamp duty land tax starts at £125,000. However, if you are a first-time buyer, you don’t pay any tax on the property up to a value of £300,000. Therefore, for a property priced at £275,000; a first-time buyer would pay no stamp duty, but someone who already owns a home would pay £3,750 in stamp duty.
This sum is made up of paying nothing on the first £125,000; paying 2% on the next £125,000 which equates to £2,500, and then paying 5% on the final £25,000 which adds another £1,250 to the final stamp duty payment.
In England and Northern Ireland, stamp duty land tax – payable when you buy a property above a certain value – kicks in at £125,000, though if you are buying your first home, you don’t pay any tax on home purchases up to £300,000. For a non-first-time buyer purchasing a £275,000 home, the bill would be £3,750 (0% on the first £125,000 = £0, 2% on the next £125,000 = £2,500, and then 5% on the final £25,000 = £1,250).
Also, people buying an additional home are required to pay an additional 3% stamp duty on property purchases above £40,000. This is applicable to landlords, and it is an issue which caused consternation in the letting industry. The additional cost has made it harder for landlords to generate a profit in the rental market, and there have been calls for this duty to be rolled back.
Possible changes regarding housing tax
The Budget will likely announce a 3% stamp duty surcharge for overseas buyers. This is likely to impact individuals and companies. However, the most significant controversy surrounding this move is that it is expected to affect people looking to move back home from mainland Europe.
When you consider Brexit, and the impact it will have on people’s right to live abroad, it is not an exaggeration to suggest many British people who left the country will look to return. Therefore, these people will be subjected to a higher rate of stamp duty.
It is also likely that this additional rate would be charged on top of the other stamp duty which is payable. Therefore, if someone moving back to the country was looking to buy a home, they may have to pay the 3% overseas buyer charge, and the 3% surcharge for second homes.
The new 3% rate, which is only applicable to England, was a pledge made by the Conservative party in the run-up to the General Election.
No matter what is announced in the March Budget, if you want to make a move in 2020, rely on Prestige & Village.