In the government’s mini-budget delivered on 23 September 2022, Kwasi Kwarteng, the recently appointed Chancellor of the Exchequer, announced a raft of measures, including changes to stamp duty. This is part of a plan to boost growth and stimulate the economy.
Here’s a quick guide on the changes to stamp duty and the impact this is expected to have on homebuyers and the property market as a whole.
Stamp duty thresholds increased
Stamp duty is a tax calculated upon completion of a property purchase. The stamp duty threshold, the level at which people begin paying this property tax, has been doubled from £125,000 to £250,000.
The threshold has also been increased for first-time buyers from £300,000 to £425,000. Additionally, the government is allowing first-time buyers to access this relief when buying a property costing less than £625,000, instead of the previous ceiling of £500,000.
These stamp duty changes are coming into effect immediately and are said to be a permanent change.
What does this mean for buyers and the property market?
The announced measures will reduce stamp duty bills across the board for buyers by up to £2,500. And first-time buyers will be able to receive up to £11,250 in relief. Chancellor Kwarteng has said these measures will take an additional 200,000 buyers out of paying stamp duty altogether.
It will help first-time buyers stepping onto the property ladder and those looking to upsize or downsize. This change could help some buyers to afford a more expensive property or allow them to spend more on renovations or decorations.
This could be especially welcome news for buyers in the middle of purchasing a home or looking to buy soon. This is particularly the case as mortgage rates have been on the rise with the Bank of England having increased the base interest rate to 2.25% on Thursday 22 September, largely due to rising inflation.
In recent years, there has been significant debate about stamp duty and what changes should be made to this tax. The stamp duty holiday during 2020 and 2021 kick-started the UK property market and led to a boom of property transactions.
Some in the property industry feel this cut will prolong and intensify demand in the property market – just as there were some signs that the market was beginning to slow down. This could also encourage the construction of more new housing, which is much-needed across the UK.
Salboy is bringing forward new residential developments in growing areas across the UK. If you’re interested in buying property, contact our team of expert advisors to discuss your options with the recent changes to stamp duty.