The newest change to stamp duty in the UK

On Friday, a change of stamp duty was made to help first time buyers join the property ladder. Chancellor Kwasi Kwarteng announced that no stamp duty needs to be paid on property value up to £250,000. This is a significant jump from the previous number of £125,000 and applies not only to first time buyers but to current homeowners as well. According to Rightmove data this means 33% of all homes on the market in England are now completely spared from stamp duty.

What is Stamp Duty?

Stamp duty is the tax paid from the buyer when a home is purchased. Before Friday, no stamp duty needed to be paid for a home, or portion of a home worth £125,000. This number has now been raised to £250,000 for all purchases and £425,000 for first time buyers.

For example, previously the stamp duty on a home worth £425,000 was 5%, meaning first time buyers were paying an additional £21,250 in tax on their purchase. Now, first-time buyers will not be paying any tax at all on a home worth the same amount.

Additionally, if you are a first-time buyer purchasing a home worth £625,000 or below, you will not pay stamp duty on the portion priced under £425,000. Instead of paying 5% on the entire £625,000, you will only pay 5% of £200,000, saving over £20,000.

How will the changes effect the property market?

In July 2020, the government established a stamp duty holiday was that was designed to boost the housing market that had been left stagnant since the Covid-19 pandemic. In the first month there was nearly a 16% increase in house sales which also led to a rise in property prices. Given the recent change to stamp duty, we asked our Sales and Lettings Director, James Redington, how this might affect the property market.

“The recent and arguably overdue stamp duty changes will continue to support the property market. It is particularly helpful for first time buyers with some huge saving now available to them and it will support lots of buyers looking to get onto the property ladder in what is still a competitive London market. It was good news that these changes have been made with immediate effect and are permanent, rather than previous changes which were only available for a period.”

Since the new changes to stamp duty are permanent there will not be a massive surge to buy like we saw last year. However, in the London property market the best time to buy is now. It is more beneficial to pay a mortgage on an investment than to pay rent. If you want to get on the property ladder, contact us today. Click here to see our listed properties.