Published: 06/10/2022In September 2022, the Government announced some changes the stamp duty bands. With immediate effect, anyone buying a residential home is able to save on their stamp duty costs and in some cases, pay nothing at all.
What Is Stamp Duty?
Stamp duty land tax (SDLT) is a tax which a buyer pays when they purchase land or a property over a certain value. How much depends on whether the land or property is for residential use, mixed-use or non-residential use. Rates vary if you’re a first time buyer, if you already own and are buying an additional property or if you’re not a UK resident.
What Has Changed?
Before the announcement, the nil-rate tax threshold was £125,000. This meant that buyers did not need to pay stamp duty on a property, or portion of a home, to this level. This threshold has now been doubled to £250,000 for all purchasers and to £425,000 for first time buyers.
This should really help people to getting on the ladder, especially in these tougher times where money is being stretched. For context, on the old stamp duty rates, a property worth £425,000 would require a stamp duty payment of £21,250 from a first time buyer. Now, it’s £0.
First time buyers have a further advantage, in that if the property’s value is £625,000 or less, they will not pay stamp duty on the portion priced under £425,000. This means they will only pay 5% on £200,000, saving over £20,000 from the old threshold.
This table explains the new bands:
|New Stamp Duty Tax Bands
|First Time Buyer Bands
|Up to £250,000
|Up to £425,000
|£250,000 - £925,000
|£425,000 - £625,000
|£925,000 - £1.5million
|£625,000 - £1.5million
|Above £1.5 million
|Above £1.5 million
This should be seen as positive news, as effectively every residential purchaser will save a bit of money. Unlike the stamp duty changes in 2020, these are permanent rather than temporary. The likelihood then is that there won’t be a race to take advantage of the savings, but it is likely to propel the market along and in particular incentivise first time buyers.
In the London property market, it is a strong time to transact. It is still more beneficial to pay a mortgage on an investment rather than paying rent, so get in touch today and we would be delighted to assist you with everything from mortgages to a valuation.