Buying a property can be a daunting task, but also one of the largest investments a person can make in their lifetime. It is a long-term commitment, and people should make sure to be financially stable when deciding on purchasing a house.
Having decided to acquire a property, the buyer should know the enormous time and energy required for researching where to invest. It is pretty exhausting for most of them with all the available information that is scattered everywhere.
It’s always best to have an agent assist with the property buying process and provide them with all the required information on how to invest in the UK in a hassle-free manner.
With the assistance of letting agents in Aylesbury, Buckingham, Battersea and other prominent boroughs of London and the UK, it becomes even simpler to break down tasks and speed up the purchasing of a property.
Buyers, be it for the first-timers or those with enough experience, everyone will have to go through a long process before getting hold of the perfect property.
Dealing with the finances of different types- upfront deposits, mortgage loans, stamp duty and more is the challenging part of the property buying journey.
Managing finances as a first-timer is an overwhelming task at hand, and people must start planning it way before stepping into this whole course. They should start saving money for initial deposits and stamp duty instead of relying entirely on the mortgage loan provided by the land lenders.
WHAT IS STAMP DUTY
Stamp duty is a type of land tax paid by the buyer while buying a property in the UK. The amount paid for stamp duty depends on:
● The type of buyer
● Completion date of the property purchase
● Price of the property
● The location where the property is built
Multiple changes has been made to stamp duty taxes recently. It has benefited the buyers and the house owners in many ways. Stamp duty land tax (SDLT) varies with the location of the property.
This type of land tax comes in various price bands, making it easier for people to decide and arrange their property finances.
The pandemic hit the property market last year, and the stamp duty holiday was introduced in July 2020. This change helped people to come forward and invest in properties across different regions of England, Ireland, Scotland and more.
Stamp duty is known by various names in different parts of the UK- Land and Buildings Transaction Tax (LBTT) in Scotland, Stamp duty land tax (SDLT) in Ireland and England, and Land Transaction Tax (LTT) in Wales.
People need not pay their taxes until the property prices are within the nil band range. Taxes are applicable for properties that are leasehold, freehold or shared ownership. The tax range is higher for second property buyers.
STAMP DUTY HOLIDAY
The property market in the UK was adversely affected during the lockdown phase. This significant dip was the primary reason why the stamp duty holiday was introduced in July 2020.
It encouraged many buyers from overseas and local regions to invest in properties despite the hurdles like the pandemic time and unemployment prevailing in the country.
This stamp duty holiday was extended till July 2021, where buyers were exempted from all taxes for the first £500,000 when purchasing a property within this period.
TAX CHANGES IMPLEMENTED IN THE RECENT TIMES
Stamp duty holiday was further extended till the end of September 2021, due to which buyers are flooding into the neighbourhoods to lay their hands on the best deals available there. However, first-time buyers have no SLDT up to £300,000 and 5% SDLT for property prices up to £500,000.
The recent changes implemented for stamp duty across the country lowered the starting threshold rate instead of totally abandoning it.
The SDLT rates in England and Ireland dropped to £250,000 from £500,000 in July 2021, and the LBTT range decreased to £145,000 from July 2020’s estimation of £250,000. LTT rates in Wales reverted to £180,000 from £250,000 in July 2021. These rates will continue till the end of September 2021.
Followed by these smooth transitions, the stamp duty charges return to the usual rates from October 1 2021, which follows the rates charged before the implementation of stamp duty holidays in July 2020. The stamp duty charges are as follows:
● No SD charged up to £125,000
● 2% stamp duty for properties ranging from £125,001 to £250,000
● 5% SD for £250,001 to £925,000
● 10% SD for £925,001 to £1.5m
● 12% for properties above £1.5m
Non-residents and overseas investors are bound to pay an additional 2% along with the standard duty charges for properties worth above £40,000.
When a buyer is planning to sell their previous property while buying a new one will have to pay higher duty charges for owning two properties simultaneously.