As political commentary revolves around whether Liz Truss will survive as Prime Minister, one thing that has survived of her economic plan or “mini-budget” was the increased stamp duty thresholds.
If you are looking to buy a property in England or Northern Ireland, you will not have to pay stamp duty on the first £250,000. That means, you will not have to pay any stamp duty if the property costs £250,000 or less. If the property costs more than £250,000, you will only have to pay stamp duty on the difference between the purchase price and £250,000.
That is a maximum of £2,500 you do not need to pay in stamp duty, which is paid after completion of a property purchase.
If you are a first-time buyer, the good news is that the stamp duty threshold is up from £300,000 to £425,000. Read our previous article to find out whether you qualify as a first-time buyer. The value of a property on which first-time buyers can claim stamp duty relief is also increased from £500,000 to £625,000.
So, for first-time buyers, that is a further £8,750 that could be saved.
When the government announced a stamp duty holiday during the pandemic, temporarily increasing the stamp duty threshold to £250,000, there was a surge in house buying. This happened even though a lot of households would have seen incomes affected by loss of work due to Covid.
So, despite the current cost of living crisis, the increased stamp duty thresholds could – at least that is what the government hopes – see another increase in house buying.
And perhaps the money that is saved in stamp duty could be redirected to help with other costs.
Unfortunately, the Bank of England has already increased its base rate to 2.25% and it is expected to increase it again to over 3%. If you are buying a new property – or remortgaging – an increase in the Bank of England base rate will only push up the cost of mortgages. A recent study has found that five million households could see their annual mortgage bills increase by over £5,000.
So, the question is whether the money saved in stamp duty is enough to cover the mortgage payments.
If you are looking to buy property, the conveyancing solicitors at Phew Conveyancing will be able to advise you on how much you are likely to have to pay in stamp duty.