Stamp Duty Reduction A Welcome Boost For First-Time buyers

Chancellor Philip Hammond’s Autumn Budget has scrapped stamp duty on properties valued at up £300,000 for first time buyers, in an attempt to give those trying to get onto the property ‘ladder’ a much-needed boost. The much-anticipated announcement in today’s budget is part of a wider strategy to help those saving for a first home, which also includes a £10bn injection into the help-to-buy equity loan.
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To ease the burden for Londoners and those looking to buy a property in highly-priced areas face when it comes to buying their first property, the Chancellor has raised the valuation threshold of properties to £500,000, where buyers will not have to pay stamp duty on the first £300,000.

Why the fuss over stamp duty? New research by the Centre For Economics and Business Research (CEBR) goes a long way to explain the controversy surrounding the tax and the ‘suffocating’ effects it has on the property market.

The report has found that hundreds of thousands more homes would have been bought or sold over the last five years if there was no Stamp Duty tax.

Before today’s Budget, you were liable to pay Stamp Duty Land Tax (SDLT) if you were to buy a residential property over £125,000. There are several tiered rate bands for Stamp Duty, and the tax that you pay is calculated by adding up all of the bands that your property price falls into.

So, for example, if you bought a house for £300,000 prior to today, the SDLT you owe was calculated as follows:

  • 0% on the first £125,000 = £0
  • 2% on the next £125,000 = £2,500
  • 5% on the final £50,000 = £2,500
  • Total SDLT = £5,000

Today’s stamp duty reform revealed in the budget means that those purchasing a property with a valuation of up to £300,000 will no longer pay any Stamp Duty.

CEBR’s research heightened concerns surrounding Stamp Duty, after revealing that the number of home purchases blocked by the tax has doubled over five years – with first-time buyers, second-home buyers, and downsizers all being affected.

According to the report, between July 2012 and July 2017 an additional 146,000 property transactions would have taken place if Stamp Duty was not in place – meaning that there has been a 2.5% decline in the number of properties changing hands. This is because house prices are continuing to climb across the UK, and so each transaction is worth more in stamp duty.

Although Stamp Duty tax raises billions for the HM Treasury, it is proving detrimental to the housing market and wider economy because it deters people from moving. After paying a high level of Stamp Duty to buy their first home, people are naturally reluctant to move again. As a result, homeowners are less likely to take up a new job in another city and, due to a lack of properties for sale, it is harder for young families to find suitable homes to move into.

The CEBR report was released just before the Chancellor addressed the current housing crisis in his Autumn Budget. A temporary cut in stamp duty tax for first-time buyers is a welcome measure and will allow more people to get onto the ‘property ladder’ and ultimately boost the economy.

Speaking before today’s Budget announcement, and in response to the CEBR report findings, Elliot Castle, Founder of We Buy Any Home, said

“I was very pleased to hear today’s announcement from the Chancellor relating to the Stamp Duty reduction for first time buyers.  It’s a welcome step in getting the UK housing market moving again and will hopefully enable the many first-time buyers who have been struggling to find the funds needed to move to take their first step on the property ladder.”


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