The government has taken a big step to help homebuyers climb the property ladder by cutting stamp duty for home-movers and axing it altogether for first-time buyers (FTBs).
Last week, the chancellor of the exchequer Kwasi Kwarteng announced an emergency Budget to boost the economy by supporting the public through the cost-of-living crisis.
He stated: “Cuts to stamp duty will get the housing market moving and support first-time buyers to put down roots.”
One of the measures includes doubling the nil band rate of stamp duty land tax (SDLT) from £125,000 to £250,000, meaning there will be an additional 200,000 people a year who will be able to avoid paying the levy.
Those who have to continue paying stamp duty will see a huge reduction in costs. For instance, homebuyers purchasing a £500,000 property will now have to pay £12,500, as opposed to £15,000.
Additionally, FTBs will not have to pay the levy on a property worth up to £425,000. They then only have to pay five per cent on any amount greater this up to £625,000. Therefore, if FTBs were to purchase a £500,000 home, they would have to pay £3,750 in SDLT.
The tax reduction came into effect from midnight on September 23rd 2022, meaning it will impact anyone already in the middle of a purchase or looking to buy a new home.
Mr Kwarteng also announced in his statement that he will build more properties on government land to increase the supply of new homes. By boosting supply, this will control rising prices, making it more affordable to FTBs to purchase a home.
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