The average UK house price hit a new high of £294,260 in August 2022, up 11% yearly. Even while the UK real estate industry is still robust and lucrative, rising home prices are making it more difficult for first-time buyers to enter the market. According to experts including estate agents in Manchester the mini-budget announcement is expected to bring many changes to the current property market.
September’s Mini Budget
In an effort to make it simpler for UK citizens to purchase real estate, Chancellor Kwasi Kwarteng announced reductions to Stamp Duty Land Tax (SDLT) on September 23. These reductions took immediate effect. The announcement was made as part of the UK government’s “mini-budget.”
According to the Chancellor, “Home ownership is the most popular way for individuals to hold an asset, giving them a share in the success of our economy and society.”
The government will raise the amount that must be paid in SDLT on the purchase of residential properties in England and Northern Ireland from £125,000 to that amount permanently. Additionally, it enables more lenient SDLT standards for first-time buyers.
From £125,000 to £250,000 and from £300,000 to £425,000, the thresholds are rising. There will also be a £625,000 increase in the maximum home valuation for which first-time buyers’ relief can be claimed, from £500,000.
“Today’s news means that conveyancing solicitors will now be watching and waiting to see how the reforms proposed by the government today will influence their workload and businesses,” said I. Stephanie Boyce, president of the Law Society of England and Wales.
What is Stamp Duty?
In England and Northern Ireland, you must pay stamp duty when buying a home or piece of land that costs more than a specific amount. Stamp duty must be paid within 14 days of the completion date.
The revised rates of stamp duty (If the individual is moving homes, not purchasing an additional property)
0%: 0 – 250 000 (for first-time buyers, 425 000)
5%: £250,000 – £925,000
10%: £925,000 – £1,500,000
As can be seen above, the threshold at which tax is due has increased from £125,000 to £250,000. This means that unless you’re buying a second home, such a buy-to-let venture, you won’t have to pay stamp duty tax on the first £250,000 of a property transaction.
In the meanwhile, the price cutoff for first-time purchasers was raised from £300,000 to £425,000. The UK government estimates that 200,000 more people will no longer be subject to stamp tax as a result of the reductions in stamp duty.
What kind of Stamp Duty Will I be Required to Pay if the Property is Not a Second Residence?
As a resident of the UK, you would pay a total of £3,100 in stamp duty if you purchased a property for the average price of a home in England, which is £312,000, under the new rates, as opposed to £5,600 under the former rate. Please be aware that there is an additional fee if you are purchasing a second property as an investment or if you are not a resident of the UK. For accurate calculations, you can also rely on Stamp Duty Calculator Manchester to determine the exact amount to be paid.
What is the Stamp Duty Rate For a Buy-to-Let Property?
The amount of stamp duty you must pay on a buy-to-let property will vary depending on your unique situation. The typical stamp duty rates above apply if you’re buying a buy-to-let property for the first time, which is unusual because most investors have already bought a home. You will pay a 3% SDLT fee if you already own property elsewhere and you’re buying a buy-to-let investment or additional house.
You will pay the following rates of the stamp duty in this situation:
3%: £0 – £250,000
8%: £250,000 – £925,000
13%: £925,000 – £1.5m
With the stamp duty cuts in place, it’s now more affordable than ever to secure your dream home. The stamp duty cuts have made it possible for people from all walks of life to purchase a property without having to worry about paying huge amounts of money in taxes.
So what are you waiting for? Get in touch with fine local estate agents in your area today and start looking at properties that match your needs.