One of the few remaining policies from the previous Prime Minister’s now infamously disastrous mini-budget is the raising of the Stamp Duty threshold. On the face of it, this is good news for buyers facing mortgage rate rises alongside ever-increasing property prices – but response from experts has been mixed, with some warning that the saving could lead to a surge in demand and therefore cause prices to spike.
The rise came in immediately on 23 September and now means that all property transactions of less than £250k are entirely exempt from the duty, not £125k as was the case on 22 September. Beyond that, £5% of the purchase price is payable on values ranging from £230k to £925k, unless you’re a first-time buyer, in which case the threshold is £425k on properties worth up to £625k (raised from £300k and £500k respectively).
This means that outside London, more buyers can purchase homes without paying any Stamp Duty at all – the Conservatives quoted 200,000 people falling into this category – while the saving on stamp duty will be £2,500 for a typical home mover, with the average house price across England set at £344,179. Within London, first-time buyers are set to benefit greatly. Recent figures show that the average first-time buyer home in the capital now costs £456,307 – which equates to a £7,815 saving on stamp duty.
For someone trading up in the capital, the average London sold house price now stands at £543,517 according to the Office for National Statistics, which at the old threshold would have equated to a £17,175 stamp duty tax bill for a home buyer. Now, the amount of stamp duty payable will be £14,675, a saving of £2,500.
For Jake Woolford of Winkworth in Crystal Palace, this is good news. He says: “There continues to be a good level of first-time buyers. One and two-bedroom flats are available at prices lower than they were at the beginning of the year and those savvy enough to purchase now are not only making the saving on stamp duty but also in the purchase price. There are a lot of opportunities for first time buyers now and even with the change in interest rates, many first-time buyers are coming away from their purchases with more cash in their pocket than previously.”
Calculate your stamp duty savings here