23 September 2022
The new Chancellor, Kwasi Kwarteng, has confirmed a permanent stamp duty cut in the mini-Budget announced to the Houses of Parliament this morning.
The first cut comes by doubling the level at which people begin paying stamp duty land tax from £125,000 to £250,000.
The government is also helping first-time buyers by increasing the level at which stamp duty starts, from £300,000 to £425,000. The government is also committed to helping them by allowing first-time buyers to access the relief when they buy a property costing less than £625,000 rather than the current £500,000.
In monetary terms, this means that stamp duty bills could be reduced by up to £2,500 for all movers across the board, with first-time buyers able to access up to £11,250 in relief.
All of these tax cuts take effect from midnight today (Friday 23 September 2022).
In line with other proposal announced today, this new government is prioritising growth. It believes by taking these measures the UK Property Market will be boosted, which in turn will help businesses expand to help fuel the wider economy’s growth.
“The government is committed to fiscal sustainability by ensuring the economy grows faster than our debts and keeping debt as a proportion of our economy on a downward path.” said Kwasi Kwarteng The cut in stamp duty will cause a steady increase in demand for housing and higher prices, according to Rightmove’s property expert Tim Bannister. “Demand has been softening over the last few months but today’s announcement is likely to stimulate some more demand."
Rightmove has also said that raising the threshold to £250,000 means that a third of all homes currently for sale (33%) are now completely exempt from stamp duty in England (up from 7% when the threshold was £125,000). It also means that two thirds of homes (66%) are now exempt from stamp duty for first-time buyers in England.
“If it does lead to a big jump in prospective buyers competing for the constrained number of properties for sale then it could lead to some unseasonal price rises over the next few months.”
However, because the change to stamp duty rules is permanent, and because of rising mortgage rates, Tim Bannister says we can expect a more gradual increase in demand compared with the spike when the temporary stamp duty holiday was announced in 2020. During the stamp duty holiday, buyers were able to save up to £15,000, but the savings are lower with this change, he explains.
Many first-time buyers are put off by the large expenses which can arise when buying a new home, but by increasing the Stamp Duty threshold, the amounts required to save and stimulate interest and purchases will be reduced. The current threshold has been risen by £125,000, meaning they will now not pay it if their first home costs less than £425,000.
Additionally, if first-time buyers do spend more than £425,000, they will now be entitled to relief – meaning they will pay 5% SDLT – up to £625,000, which again is an increase of £125,000 on the current limit.
It is hoped that this reduction in stamp duty will certainly stimulate the market, as homeowners and purchasers across Yorkshire will save money, have more confidence and, as a result, will be more likely to buy.
The reduction will also ease things for both the vendor and purchaser, helping to make more transactions happen. It is likely that house prices will see an increase following this announcement and with the cut being effective immediately, I anticipate a large surge in both buyer enquiries and people interested in coming to market.
To find out more or book a valuation for your property, please call your local branch.