Buying your first property is a big milestone in anyone’s life, but there are loads of unforeseen extra costs that come with it. It can feel like a massive mountain to climb to even get a deposit together, so being prepared for the other outgoings involved in the buying process is essential.
For one, stamp duty might be something you’ve not come across before, but if you’re planning on buying a property that’s worth over £300,000 then it’s something that will affect you. There’s a considerable lack of education around buying properties and the financial implications involved until you’re in the process, so whether you’re just starting to think about your first property or you’re further along in the process, this guide is for you.
Will it affect you?
There have been calls for the government to completely scrap stamp duty for first time buyers for a long time, but instead of abolition, they’ve introduced changes that should positively impact the majority of first time buyers.
The good news is that because of the 2017 Budget, some first-time buyers won’t have to pay any stamp duty on their purchase, which can lead to financial relief. If your purchase is less than £300,000, you’re exempt from stamp duty and if there’s also reduced liabilities for anyone buying a home worth between £300,000 and £500,000 – but this is less likely for first time buyers. The stamp duty will be 5% for £300,000 – £500,000.
The average first time buyer purchases a property worth £207,000, so the government estimates that 95% of first time buyers will benefit from stamp duty exemptions. This can save a buyer an average of £1,650, which can go towards other costs or property modifications – we’re sure you’ll agree that it’ll be very welcome!
There’s no doubt that getting rid of stamp duty for most first time buyers is really helpful, but the costs involved in buying a property are still much more burdensome than they were a couple of decades ago. People are having to save for years to generate a deposit and often have to rely on government home-buying schemes, help from family members or inheritances. The majority of buyers don’t have access to financial support from anyone else though and shouldn’t be excluded from the housing market because of this.
Since the scrapping of stamp duty for most first-time buyers, there’s still been moderate growth in overall sales to first-time buyers, so it hasn’t affected statistics too much. This suggests that the overall costs and money needed to buy a property is still a big challenge for lots of first-time buyers looking to get on the housing ladder.
Whereas the changes to stamp duty are a step in the right direction, there’s still an argument that the government should be doing a lot more to make life easier for first time buyers. Not paying stamp duty will benefit buyers, but there are many other ways to make the housing market more accessible to buyers and not just a pipe dream.
For more advice about buying your first home, contact our team at Home EA today.