Many second home buyers and buy-to-let investors will benefit from a temporary stamp duty cut, which could potentially save them thousands of pounds.
Chancellor Rishi Sunak has said these buyers will only pay the tax at a rate of 3pc on the first £500,000 of a property's price. Previously, second home buyers would pay 3pc on the first £125,000, after that they were charged 5pc on the next £125,001 to £250,000, with the rates increasing as the property value did.
The stamp duty holiday will last until March 31 2021. Those buying a main home will not be charged any stamp duty on the first £500,000.
Jamie Johnson of property investment firm FJP Investment said: “Faced with ongoing changes to the buy-to-let market, there has been a notable increase in the number of landlords exiting the market.
"This provides some much-needed relief to a section of the property market that has long felt neglected.”
Someone buying a second home worth £150,000 would save £500 on their stamp duty, according to calculations by stock broker AJ Bell. For someone buying an additional property worth £500,000, the saving would be much larger. Their tax bill would halve, falling from £30,000 to £15,000.
Since April 2016, anyone buying an additional property – essentially, second homes and buy-to-lets – has had to pay an additional 3 percentage points in stamp duty. The charge applies above the normal stamp duty rates.
Now the normal stamp duty rates have been cut, those buying an additional home will also benefit. They will pay 3pc tax on the first £500,000 of the property's price, 5pc on the value between £500,001 to £925,000, 13pc on the next £575,000 (the portion from £925,001 to £1.5m) and 15pc on anything over £1.5m.
Previously the respective tax bands were: 3pc up to £125,000, 5pc on anything between £125,001 and £250,000 and 8pc on the value between £250,001 and £925,000. The tax rates for the bands between £925,000 to £1.5m and over £1.5m have not changed.
Buy-to-let investors who already own their own home have to pay the surcharge, as does anyone who helps a child buy a property. There is still widespread confusion about when the surcharge does and does not apply, even among property professionals.
Readers have reported inconsistent application of the rules from solicitors who appear as unsure as their clients. Telegraph Money has found scores of illogical cases and unintended consequences of the law.
Some people have been charged when they buy a replacement primary property, which is in theory exempt under the rules, because they are self-building and are left in their current home longer than expected. Married couples have also been caught out, with some in the bizarre situation where they would save thousands by getting divorced.
Buyers can apply for a refund if they sell their old home within three years of buying the a new one.