Summer Statement – The property and construction updates you need to know
The Chancellor has announced some welcome changes to policy and tax in relation to the property and construction industry as part of his speech on 8 July 2020. The Chancellor stated, “It is crucial to ensure medium-term confidence in the property market and maintain the growing momentum since the easing of lockdown.”
The main change is a temporary increase in the 0% Stamp Duty Land Tax (“SDLT”) threshold for the purchase of residential property in England and Northern Ireland from £125,000 to £500,000. This is effective from 8 July 2020 until 31 March 2021. This means that the previous First-Time Buyers Relief which reduced an individual’s exposure to SDLT for qualifying individuals has been temporarily suspended and all purchases by individuals, trustees and Personal Representatives could benefit from this change. As an example, an individual who was purchasing a home for £400,000 would have previously spent £10,000 in SDLT assuming it was their only property or replacement home. Should they purchase the property before 31 March 2021, this liability is being reduced to nil.
Whilst this goes some way to helping ease the pain in the associated costs of purchasing a house, especially in the South East where average prices are generally higher, it doesn’t mean all residential property purchases of £500,000 or less will result in no SDLT being due. The previous surcharge rate for additional residential property interests or acquisitions by non-natural persons (namely companies) have not been removed but instead the threshold to which the 3% applies has increased to £500,000. A property investor or an individual who is not immediately selling their own home will therefore be subject to SDLT on a property price of £400,000 of £12,000, a saving of £10,000 compared with the rules before the Chancellors Announcement.
As well as these changes homeowners and landlords will also be able to benefit from a Green Homes Grant where they spend money in making their homes more energy-efficient. The grant is up to a maximum of £5,000 per household and details of what this covers is yet to be confirmed. Further support has been given to those on the lowest incomes, allowing them to claim back up to £10,000, per household. It is the governments expectation that this will support over 100,000 green jobs and help strengthen the property supply chain. It is also being used as a measure to support their target of net-zero greenhouse gas emissions by 2050.
Both of these measures are in addition to the Prime Minister’s previous announcement to accelerate over £5 billion of infrastructure projects to support the recovery of the economy.
If you have any queries in relation to the above or Stamp Duty Land Tax in general, please get in touch.
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