What does the new Stamp Duty Cut mean for Homebuyers?
In Kwasi Kwarteng’s short-lived tenure, the mini-budget he announced caused waves, one thing that naturally stuck out for us here at Home EA was the cut to Stamp Duty that was included.
This comes almost a year after the Stamp Duty holiday that so many benefitted from ended. The Stamp Duty cut announced is permanent, with no tax on properties to be paid up to the value of £250,000. There is also an increased threshold for first-time buyers up to £450,000.
Stamp Duty
What is a Stamp Duty? It’s a tax paid by people buying a home in England and Northern Ireland. It’s calculated by looking at the value of the property someone is buying. Previously, the first £125,000 of a property was tax free for buyers and then 2% of the value of a property was charged above that up to £250,000 and then 5% from £250,000 to £925,000.
Changes
The newly announced changes would see that no stamp duty would be paid on properties up to £250,000 and then 5% of the value of a property would be charged above £250,001. There are no changes to the 10% of property value being charged between £925,001 and £1.5m and 12% for anything over this.
In a move to try and boost home buying, first-time buyers will not be charged stamp-duty for any property with a value under £425,000. This has risen from £300,000 to £425,000. First-time buyer relief will also increase to £625,000, from £500,000.
Even if you’re in the process of buying a property at the moment, you will be able to benefit from the changes and contact your solicitor for guidance.
Reaction
Like most subjects, there has been a mixed reaction to these changes. While in the short term, this can be a positive way to ease the cost pressure on buying a property, it may prompt house prices to increase.
The issues in the housing market at the moment aren’t necessarily about persuading more people to buy, the demand is there, it’s that there is a shortage in supply and more housing needs to be built to accommodate this shortage.
However, while there could be some short-term spikes in house prices because of a reaction to this change and people deciding to buy, the fact it’s permanent could mean that in the long-term, demand is slower. The temporary holiday obviously had a limit to it, so the time-pressure created more spikes and also buyers were able to save more than they are with the new change to Stamp Duty.
It’s generally positive to see more first-time buyers able to buy a property and being able to encourage this as much as possible through policy is a welcome change.
For more advice and info about buying or selling a property, get in touch with our team at Home EA and we’ll be happy to chat through the process and use our expertise to offer our thoughts on the housing market in general.
