We’re sure by now you’ve heard about the changes to stamp duty, but what does it mean for you and other first-time home buyers?
In Budget 2017, stamp duty was immediately abolished for first-time buyers on purchases up to £300,000. Or, for houses costing £500,000, no stamp duty will be paid on the first £300,000. This change applies to England, Wales and Ireland, but this doesn’t apply to buyers in Scotland.
According to the BBC, “Mr Hammond said this meant 95% of first-time buyers would see stamp duty cut, while 80% would pay none at all.”
The change came into place at midnight on the 22nd of November. If you have already exchanged but not completed, you will still be eligible under the new scheme.
Mr Hammond also said, “This is our plan to deliver on the pledge we have made to the next generation that the dream of home ownership will become a reality in this country once again.”
The Office for Budget Responsibility said the main people to benefit from the change to stamp duty is current homeowners. ‘They expect house prices to rise 0.3% within a year as a result of the change’.
First-time buyers in the south of the country, where house prices are higher, will see more benefits from these changes. However, according to the Independent, ‘those living in the north, where the previous stamp duty threshold of £125,000 is barely above the first-time average price, will see little benefit’.
Despite this, the changes to stamp duty is still a step in the right direction to helping first-time buyers get on the property ladder.
What is stamp duty?
Stamp duty is a progressive tax (the tax rate increases as the taxable amount increases) that you are liable to pay when purchasing a property. When the cost of the property increases so does the stamp duty. If you live in England, Ireland and Wales you have to pay stamp duty whereas people in Scotland pay land and building transaction tax.
Previous regulations meant you paid stamp duty on properties that were worth more than £125,000 whether you were a first-time buyer or not. In 2016, a stamp duty tax was introduced on buy-to-lets and second homes, which came into place to open up more houses for first-time buyers.
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