The Chancellor of the Exchequer, Rishi Sunak, held a speech on the 8th March outlining the new stamp duty laws that are set to take place immediately. The changes include a raise of the nil-rate band threshold to £500,000 from £125,000. Rishi Sunak highlighted the intent of this tax holiday. He is hoping that the reduced stamp duty will boost public confidence and thus increase transaction activity in the housing market.
The nil-rate band will only apply to purchases of a main home property. This means that in order for one to benefit from the tax holiday, one will have to be purchasing the property that they intend to accommodate. Additional properties have also been given separate rates, starting at 3% with properties up to £500,000.
Though many critics are concerned that property and buy-to-let investors will disproportionally benefit from the tax holiday, additional homes will experience different tax brackets in an attempt to mitigate against the greater purchasing power of these individuals. Moreover, some are also worried that wealthier participators in the property market are better positioned to benefit and thus will serve to push up prices to unaffordable rates for first-time buyers. The scheme is set to last until 31 March 2021, leaving much time to assess the effects of the tax holiday.