Mortgage bills could be made even more expensive than they already are if stamp duty is involved. In England and Northern Ireland, people will be liable to pay stamp duty when they purchase a residential property or piece of land costing more than £125,000 (or £40,000 for second homes).
This tax will apply to both freehold and leasehold properties, regardless of if they’re being bought outright or with a mortgage.
The actual rate charged will depend on the property itself and the circumstances in which it’s bought but the bill can easily top several thousand pounds.
Property has become a big focus for people in recent months as coronavirus impacted people’s ability to not only move, but also just conduct viewings.
Many people are understandably worried about the impact this will have on people’s lives as well as the wider economy.
READ MORE: SDLT: Expert calls for a scrapping of stamp duty surcharge rules
“Tax losses from a reduction in the rate could even be recouped by an increase in the number of sales.”
Cutting stamp duty could even benefit a new normal way of life that may emerge as the lockdown ends, as Chris continued: “A stamp duty cut would help people with existing plans to move home, and people considering a move, for example out of the city, because they’ll now be working remotely more often.
“As working arrangements and personal financial circumstances change, the UK will require a degree of right-sizing between homes.”
Stamp duty bills may be levied in a wave of movement soon as some people may be keen to get back to their mortgage concerns once the economy opens up.
In this haste, it may be likely that some people could forget about the short term obligations that stamp duty presents.
Any SDLT due must be paid within 14 days after the effective date of the transaction.
If the payment is late, interest will be added to the bill, creating a bigger problem down the line.
While properties valued less than £125,000 will not have SDLT levied, there are other circumstances where it may not be due.
According to the Money Advice Service, stamp duty will either be not be due or could be reduced under the following circumstances:
- Slightly over rate band – If the price is only just within a higher band, the buyer can ask the seller or estate agent if they would accept a slightly lower price.
- Transfer of property in separation or divorce – If a person is divorcing or separating from their spouse or partner, there’s no Stamp Duty to pay if they transfer a proportion of the home’s value to them
- Transfer of deeds – If a person transfers the deeds of a home to someone else – either as a gift or in a will – they won’t have to pay Stamp Duty on the market value of the property