In an effort to support home buyers who are finding it increasingly hard to afford a property, Chancellor Kwasi Kwarteng recently announced a stamp duty cut for some categories of buyers in England and Northern Ireland.
Stamp duty is a form of tax paid upon purchasing a property. This stamp duty cut is part of the government’s mini-budget and comes into effect straight away. It comes almost one year after the pandemic-related stamp duty holiday ended.
Our estate agents in Newham are up-to-speed on the government’s decisions. In this article, they explain what stamp duty is and how these new changes will affect you as a buyer.
If you are looking for a new home in East London and want to enlist the help of a professional and dedicated team that will help you secure your dream property, contact our estate agents in Newham at 0207 055 0441. We have exclusive listings and provide top-quality services and advice.
What you can find in this article:
- What Is Stamp Duty?
- What Are the New Stamp Duty Rates?
- What the Stamp Duty Cut Means for You
- What Does the Stamp Duty Cut Mean for the Market?
What Is Stamp Duty?
Stamp duty also known as Stamp Duty Land Tax (SDLT) is a tax owed by buyers in England and Northern Ireland. It also applies under a different name to properties bought in Scotland and Wales.
Buyers pay stamp duty tax when they purchase a property that is above a certain price threshold. It is paid as a percentage of the property’s price.
Stamp duty tax is due for payment no later than 14 days as of the date of completion in England and Northern Ireland. In Scotland and Wales, buyers have 30 days to pay the tax. Failure to pay stamp duty tax may result in a fine or interest added to the tax amount.
According to our estate agents in Newham, home buyers mainly prefer to pay this tax via their solicitors once they complete the sale process. Other buyers prefer to pay the tax themselves either online or by cheque or cash.
Some buyers choose to add the value of the stamp duty tax to their mortgage loans. However, our estate agents in Newham emphasize that these buyers will have to pay more interest as their debt increases.
Stamp duty tax is paid by buyers when they purchase the following types of properties:
- Freehold properties
- New or existing leaseholds
- Properties through shared ownership schemes
Buyers also have to pay stamp duty tax when they acquire land or property by transfer in exchange for payment, such as when taking on a mortgage or buying a share in a home.
The amount of the stamp duty tax depends on the type of property you are purchasing. Lands or properties can be for residential or non-residential use and mixed-use.
Certain categories of buyers have different stamp duty rates. These include:
- First-time buyers
- Buyers who already own a property and are buying an additional property
- Buyers who are not UK residents
According to our estate agents in Newham, tax deductions and relief are available for first-time buyers and buyers who are purchasing more than one property (‘multiple dwellings’).
What Are the New Stamp Duty Rates?
The main change introduced by the government is that the price at which stamp duty is paid has doubled. Before, buyers would have to pay tax for properties priced above £125,000. Now, they have to pay stamp duty tax for properties priced above £250,000.
The new stamp duty rates announced by Chancellor Kwasi Kwarteng are:
- 0% for properties priced between £0 and £250,000 (£425,000 for first time buyers)
- 5% for properties priced between £250,000 and £925,000
- 10% for properties priced between £925,000 and £1,500,000
- 12% for properties priced upwards of £1,500,000
Our estate agents in Newham note that first-time buyers can also benefit from tax relief if the property is priced between £500,000 and £625,000.
What the Stamp Duty Cut Means for You
If you are in the market for a home, you will only pay stamp duty if the property’s value exceeds £250,000.
As our estate agents in Newham explain, if the property price is under this threshold, you will not have to pay any stamp duty tax. If the property price exceeds £250,000, you will pay stamp duty for the difference between £250,000 and the total price of the property.
If you are a first-time buyer, you can buy a home for £425,000 and not pay any tax. If you buy a home that is under £625,000, you can benefit from discounted stamp duty rates.
What Does the Stamp Duty Cut Mean for the Market?
The government’s main goal with this stamp duty cut was to stimulate the housing market. As expected, this decision has got everyone talking.
Our estate agents in Newham are seeing some support for the government’s decision in the hope that it will help first-time buyers get onto the property ladder.
On the other hand, some are worried that this decision may lead to a further increase in home prices.
However, according to our estate agents in Newham, there are many other factors influencing the rising price of homes, with the housing shortage being the most significant, followed by rising interest rates and costs of living.
Our estate agents in Newham are highly experienced in navigating the ever-changing property market and providing advice to buyers, sellers, and landlords alike. If you are interested in purchasing a new home, enlist the help of our estate agents in Newham in order to secure the ideal property and make the most profitable deal. To learn more about the professional services we offer to buyers, sellers, and landlords, contact our experienced estate agents in Newham today at 0207 055 0441.
