First-time buyers (FTBs) have struggled to get on the property ladder for the last few years, as a result of escalating house prices. However, the government has taken steps to help by axing stamp duty land tax (SDLT) for the majority of FTBs.
Last week, chancellor of the exchequer Kwasi Kwarteng revealed a Mini Budget to help the public cope with the cost-of-living crisis. One of the important changes he made was to cut SDLT, so FTBs do not pay any levy on the first £425,000 of the value of the property.
Prior to this, the threshold was £300,000, meaning FTBs buying a £425,000 property can now save themselves £6,250 in taxes.
Mr Kwarteng said: “Cuts to stamp duty will get the housing market moving and support first-time buyers to put down roots.”
Indeed, with the average asking price for a property in the UK reaching a record £292,000 in July, those putting down a ten per cent deposit for their first house would still have needed nearly £30,000 cash for their down-payment.
Property price rises do not appear to be slowing down either, as values have soared by 15.5 per cent in the 12 months leading to July 2022, which is the highest growth rate seen since May 2003, according to the latest Office for National statistics’ UK House Price Index.
As well as helping FTBs, the chancellor has assisted home-movers by increasing the nil band threshold to £250,000 from £125,000. Therefore, homebuyers only need to pay tax on anything above this amount (five per cent up to £675,000 and ten per cent from £925,000 to £1.5 million). Properties with a greater value than this would be subject to a 12 per cent tax above £1.5 million.
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