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Buyers Sluggish Response to UK’s Stamp Duty Freeze
To revitalize the property market after the country’s first coronavirus lockdown, the Chancellor of the Exchequer announced a temporary freeze on stamp duties, or transfer taxes, in England and Northern Ireland on purchases of up to £500,000 (US$668,704). That’s up fr
BY
Realty Plus
Published - Tuesday, 08 Dec, 2020
To revitalize the property market after the country’s first coronavirus lockdown, the Chancellor of the Exchequer announced a temporary freeze on stamp duties, or transfer taxes, in England and Northern Ireland on purchases of up to £500,000 (US$668,704). That’s up from the typical threshold of £125,000. For purchases over that amount, buyers pay no stamp duty on the first £500,000 and then pay a tiered tax after that. It means you can save up to £15,000.
The holiday, which was announced in July, expires on March 31, 2021. But a surge in activity in recent months means it is taking longer than usual to complete deals. In the City of London, for example, the year-over-year increase in time between listing and completed sale is as high as 110 days.
As the deadline looms, buyers whose purchases take too long to complete could miss out on the tax savings. (There is some talk of a potential extension to the tax holiday just as authorities extended the U.K.’s furlough scheme but that is not a guarantee. The government, more recently, appears to be focused on filling fiscal holes where it can.) So how quickly should you get moving? “I think the short answer is you probably already want to be underway in terms of a transaction,” said Knight Frank’s head of U.K. residential research, Tom Bill. If you’re not, you’ll need to be very soon. He stressed that to benefit from the tax holiday, you must have completed a transaction not just exchanged contracts. At the moment, that can take several months. “Absolutely this side of Christmas, that process would need to be under way if you were to have any sort of guarantee or comfort of it being complete before the end of March,” Mr. Bill said.
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