This morning's announcement by Chancellor Kwasi Kwarteng confirmed cuts to Stamp Duty - a land tax that people pay here in the UK when they buy a property. The cuts take effect from today (the 23rd of September), and are intended to help boost economic growth. This is timely as yesterday the Bank of England voted to once again increase interest rates by another 0.5%, bringing the base rate from 1.75% to 2.25%.
So what do today's Stamp Duty cuts mean for buyers?
There's a lot of info out there but none of it very clear, so we've summarised the facts for you here. (These apply to England and Norther Ireland)
- Before today, buyers were not charged stamp duty on the first £125,000 of their house purchase, regardless of their status as a first time buyer or otherwise. Now, that threshold has moved up to £250,000.
- For first time buyers there are two changes. Before today, they didn’t pay Stamp Duty on the first £300,000 of their property purchase. From today, that threshold has increased to £425,000.
- Before today, first time buyers only qualified for the relief mentioned above if their new property was worth less than £500,000. If it was worth more, these first time buyers were charged normal Stamp Duty Rates. From today this threshold has increased to £625,000.
- With today's changes, buyers who qualify for the first time buyer relief will be charged 5% Stamp Duty between £425,000 - £925,000, and those who don't qualify will pay 5% Stamp Duty between £250,000 - £925,000 of their property value.
- Stamp Duty on property value brackets between £925,000 - £1.5 million, and over 1.5 million, remains unchanged at 10% and 12%, respectively, on your main residence. Rates for additional properties also remain unchanged.
First time buyers will now benefit from up to £11,250 in Stamp Duty relief, with other buyers able to access up to £2,500 in Stamp Duty relief. According to the Property Industry Eye, the doubling of the threshold where no buyer pays Stamp Duty from £125k to £250 will translate to almost 30K more people being able to move home each year and increase confidence in the economy.
Dan, our Sales Consultant, comments "I think we'll see a small influx of buyers registering in the coming weeks, particularly for properties up to the £625k range. Especially for first time buyers, the savings of up to £11,250 is attractive. I think we'll just need to see how this will balance out against the increase in mortgage rates off the back of yesterday's base rate increase."