It’s that time of year again where the Autumn Budget is announced, and Chancellor Phillip Hammond has several ambitious plans in place for the coming months. What’s most relevant to those in the property industry, though, as well as anyone buying or selling property, is the fact that there are some big reforms planned regarding stamp duty. So, let’s take a look at just what those reforms are, and the impact they will have.
It’s good news for those living in England, Wales, and Northern Ireland, as the latest Budget completely abolishes stamp duty on properties worth up to £300,000. You’ll still have to pay it with more expensive properties, but with those that cost £500,000 or under, you still won’t pay any stamp duty on that initial £300,000. This is an enormous jump, since the previous threshold for stamp duty was previously set at a modest £125,000. That certainly covered a lot of homes in the North, where properties are generally cheaper, but the effects of these new regulations will really be felt further south.
The average property price for a first-time buyer in the UK is around £208,000. Up until now, stamp duty would add £1,660 on to that figure, which is not insignificant for those making their first step on the property ladder. As we said, the region where this will have the most impact is in the South East, since there, the average property price for these first-time buyers is around £278,000- so they will be saved from a rather hefty bill. Even in London, where that figure is around £410,000, buyers will still be able to make substantial savings.
That being said, it only takes a rise in house prices to outweigh the benefits of these stamp duty reforms, since the savings are only a relatively small part of the overall price of a property. The reforms also don’t take action against the single biggest obstacle to first-time buyers- the deposit on their chosen property. According to research by Halifax, the average deposit costs £37,101, so younger buyers will still have to do some serious saving before they can think about going through with a purchase.
As with many laws nowadays, the issue of stamp duty is devolved to each individual country of the UK. While Northern Ireland follows the same stamp duty laws as England, the average house price there is just £132,000, so the effects won’t really be felt there very much. Wales has these reforms in place temporarily, but only until next April, where they will adopt new rates of 2.5% tax on properties over £150,000. In Scotland, they have their own individual law, called the Lands and Buildings Transaction Tax, which is applied to property purchases over the average price of £145,000. It may be that Scotland and Wales will follow suit in the future, but for now, it’s only England and Northern Ireland which will see these reforms on a permanent basis.
As well as these stamp duty reforms, the Chancellor has also announced his intentions to see some 300,000 new homes built every year by the middle of the next decade. This isn’t a formal part of the Budget, but it’s good to see action being taken against the current housing shortage. Local authorities are also being given the power to double council tax premiums on empty homes, to encourage these owners to make them available to tenants.
Advice is that this may push prices of homes targeted at first-time buyers up due to demand so act now…
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