Keeping up with Kwasi
Chancellor Kwasi Kwarteng delivered his mini budget on Friday 23rd September 2022. Among the many announcements, Kwasi has proposed a permanent cut to the Stamp Duty Land Tax (SDLT) in hopes that this will help people on all levels of the property ladder.
What is Stamp Duty and how is this now changing?
Stamp Duty Land Tax is a tax which needs to be paid by homeowners based on the value of the property they are buying. The government has announced a permanent change to the tax – the threshold for the duty has risen from £125,000 to £250,000. For first-time buyers in England, the level has increased from £300,000 to £425,000. With the portion between £425,001 to £625,000, the tax will be 5%. If the purchase price is over £625,000 then no relief will apply.
How much money will you save from the Stamp Duty Land Tax cut?
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Will the Stamp Duty cut increase house prices?
The Stamp Duty holiday that was introduced by ex-Chancellor Rishi Sunak during the pandemic, increased house prices in the UK causing a major concern in the current market for first-time buyers. This cut is rumoured to push home prices up, as the lower tax rate could result in increased demand. What you will save in SDLT, you will ultimately end up paying in house prices. Previously, the average UK house prices jumped by 15.5% annually in July, which was the biggest increase in 19 years!
Will the lower Stamp Duty affect mortgage costs?
As we have all seen with the Bank of England’s half-point interest rate hike this week, the new SDLT reduction could push mortgage costs up too. There could be a big issue when the mortgage rates increase as people come out of historically low fixed rates from the past 2-3 years. There are going to be many households who will really struggle with the new mortgage rates.
Will you benefit if you are in the process of buying a property?
The good news is that most people who are in the process of buying a property should benefit from the SDLT cut, as it has come into immediate effect.
Our award-winning team of 5-star conveyancers are on hand to answer any questions, and to help with your first or next property purchase. Call our team on 020 3588 3500 to get started.