When you buy a property, you have to pay stamp duty tax. The UK government introduced a stamp duty holiday in July 2020 to help buyers recover from the pandemic. Coronavirus impacted every industry, and the UK’s finances took a big hit. The stamp duty holiday boosted the property market and allowed people to keep moving through the property ladder.
Property buyers haven’t paid any stamp duty on the first £500,000 of their property since June 2020. From July 2021, the government introduced stamp duty on properties above £250,000. For more expensive properties, buyers must pay a larger percentage to stamp duty. For example, a property over £1,5000,000 equates to a 12% stamp duty compared to just a 5% stamp duty on homes between £250,000 and £925,000.
Key Advice found that grandparents gifted nearly £1 million per day during the Stamp Duty Holiday to help their grandchildren buy a home. Older homeowners gifted a whopping £323.9 million worth of their housing equity to younger family members to help them move up the property ladder. Older family members used equity release to free up some money so they could help their younger relatives.
CEO at Key, William Kale, said: “With the Stamp Duty Holiday giving people an unprecedented opportunity to climb onto the property ladder, the Bank of Gran and Grandad has stepped up to help finance it.”
Family members have made a huge difference with young buyers looking to buy their first home. Jumping on the property ladder in a pandemic can’t be easy, that’s for sure.
From October 2021, the stamp duty rates will return back to normal in the UK. As the pandemic finally subsides and restrictions lift, the UK will return to normal life. The covid schemes and tax holidays will come to an end, and the post-pandemic era will begin. Stamp duty will be introduced on homes over £125,001.
The stamp duty holiday made a huge difference for property buyers in the pandemic. They could save up to £15,000 on homes and make the most out of the finances. There are also measures in place for first-time buyers, who may struggle to access the property ladder after the pandemic. From July, first-time buyers will not pay stamp duty on purchases up to £300,000. The help-to-buy scheme was also introduced to help first-time buyers with their deposits. Under the scheme, new buyers can now put down a 5% deposit, and the government will provide a loan of up to 20%.
As the stamp duty holiday comes to an end, first-time buyers can still utilize the other government schemes in place. If you are looking to buy a home soon, talk to your family members for advice and make sure you understand the process fully.