What do the latest Stamp Duty changes mean for buyers?

07/10/2022

As part of the government’s mini-budget released towards the end of September, the Chancellor has announced new changes to the Stamp Duty guidelines that have come into effect immediately.

The key takeaway from this is that the threshold for paying Stamp Duty Land Tax has been doubled - from £125,000 to £250,000.

This means that those considering moving home will now pay 0% Stamp Duty on the first £250,000 of their property purchase and potentially none at all if the value of the property is below that threshold.

First-time buyers have also been impacted by these changes. Those buying residential property for the first time ever will not have to pay SDLT on properties up to £425,000, with the discounted rate also applying to properties costing up to £625,000 (up from £500,000).

This means that, at the time of writing, the current Stamp Duty rates for a single residential property are:

£0 - £250,000 = 0%

£250,001 - £925,000 = 5%

£925,001 - £1,500,000 = 10%

£1,500,000+ = 12%

How much Stamp Duty will I pay?

With this in mind, if you’re considering moving home, it’s important to consider how your Stamp Duty rates may change.

Following the raise of the threshold to £250,000, there’s now a much wider supply of properties available that wouldn’t require a SDLT payment - which the government is hoping will help sustain property markets around the country.

Likewise, despite the movements in the mortgage market, first-time buyers that can take advantage of the increase to £425,000 (and the discounted rate therafter) may find significant savings in terms of SDLT.

For the average home mover that has owned property before, based on the average UK property price today, individuals can save £2,500 on Stamp Duty with these new rates.

When and how do you pay Stamp Duty?

The rules around Stamp Duty haven’t changed - you still have 14 days to pay following the date of completion if you’re buying in England or Northern Ireland.

If you’re in Scotland or Wales, you have 30 days from the purchase date.

In most cases, your solicitor will help you pay your Stamp Duty Land Tax, although there are ways of paying directly online or through your bank.

You can also add your Stamp Duty to your mortgage loan but remember, increasing your debt could mean paying much more because of interest payments.

What effect is this likely to have on the market?

After the closure of the property market during the pandemic, the announcement of it re-opening alongside the implementation of a stamp duty holiday drove transactions and property prices to new levels.

While there are a number of factors that could have impacted the market, it’s widely accepted that the SDLT holiday played a major part in stimulating the market to record-breaking levels. This is highlighted by data from the Office for National Statistics (ONS), which showed that house prices in the UK rose by 15.5% between July 2021 and 2022, up from 7.8% in June.

The difference this time around is that interest rates aren’t as low as they were a year ago. With rates rising and mortgage providers still wary of lending specific products, it’s increasingly likely that the market may cool over the next year. That said, history suggests that factors such as low supply and high demand will continue to sustain activity, supported by affordable home ownership schemes and initiatives such as the Stamp Duty changes mentioned above.

If you want to know more about what’s happening with the UK housing market and how it may impact you, you can read our latest blog here.

What options are available?

If you’re considering buying a new home or you’re looking to get on the property ladder, there are a number of affordable home ownership schemes that may be able to help you.

Shared Ownership and Rent to Buy are both key schemes introduced by the government to assist homebuyers, offering more affordable routes into market.

Here at Platform, we’re always looking to help people get onto the property ladder. As the mortgage market shifts and we see changes to things like Stamp Duty, it’s worth speaking with us today about how you can start your property journey.