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September 25, 2020

The London property hotspots where the stamp duty holiday creates the biggest savings

Until March 31, 2021 stamp duty will be suspended in England and Northern Ireland on purchases of up to £500,000—up from the typical threshold of £125,000. For purchases over that amount, in England and Northern Ireland, buyers will pay no stamp duty on the first £500,000 and then pay a tiered tax after that.

The most positive effects of Chancellor Rishi Sunak’s stamp duty ‘holiday’ are likely to be felt in London. With the capital’s property market hit hardest by the uncertainty of Brexit and the COVID-19 pandemic, the news that buyers will now pay no stamp duty on the first £500,000 of their purchase prices until March 31, 2021 is a welcome boost to Londoners and those moving into the city.

First-time buyers and stamp duty in London

Following Mr Sunak’s announcement on July 8 of the stamp duty ‘holiday’ for buyers in England and Northern Ireland, no stamp duty is payable on the first £500,000 of a property purchase.

So, the first-time buyer paying £450,000 for a London property will now pay no stamp duty at all.

 

Stamp duty in London: Non-first-time buyers

The average price for a property in London currently stands at £628,284, according to the latest Rightmove data. So, under the new stamp duty rules, a buyer purchasing a property for that price would save £15,000 on stamp duty compared with the old rules.

 

Property investors in London

In a major boost for property investors and landlords, Mr Sunak confirmed the stamp duty ‘holiday’ would also apply to them.  Buy-to-let investors and those buying second homes will still need to pay an additional 3% stamp duty surcharge on additional homes.

 

Help to Buy and stamp duty in London

The stamp duty ‘holiday’ is likely to see applications for Help to Buy in London spike in the coming months, so buyers looking to use the government equity loans could expect to see some delays in processing. Help to Buy in London sees the government lend up to 40% of a property’s purchase price, with the buyer only needing a 5% deposit and a 55% mortgage.

The scheme is open to first-time buyers and existing homeowners buying new-build properties in London up to a maximum value of £600,000.

 

Where are the stamp duty holiday hotspots in the Capital?

Post-lockdown buyers have shown a huge amount of interest in locations in the Capital where it is possible to buy a three-bedroom family home for less than £500,000. These include Harrow, north-west London; East Ham, in east London; Edmonton in north London and Morden in south London.  Bow, Lewisham, and Deptford are also proving to be hugely popular.

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