Back in November, Chancellor Philip Hammond announced that stamp duty would be abolished for first-time buyers buying a home of up to £300,000. But what is stamp duty and how much will this really help first-time buyers?
What is stamp duty?
Stamp duty (formally known as Stamp Duty Land Tax or SDLT) is a charge that you must pay when you buy property or land that is over a certain price. It applies to England, Wales, and Northern Ireland. Scotland pay Land and Buildings Transactions Tax, which is similar to stamp duty, but has different regulations.
Stamp duty came into effect in December 2003, and is taken as a percentage of the property transaction.
Why is it called stamp duty?
Stamp duty can cause confusion purely because of its name. It was first introduced in 1694, and it was actually named in reference to the physical act of stamping a document to confirm that the right amount of tax had been paid by a homebuyer.
Now, of course, we no longer need to physically stamp official documents thanks to technology, however, the name remains.
What are the current stamp duty rates?
These rates apply only to those who are not buying for the first time.
Source: Stamp Duty Calculator
How are first-time buyers affected by the changes in the Autumn Budget?
Stamp duty has been abolished for first-time buyers buying a house under £300,000. This does not just assist those living in areas where house prices are lower, however, as if you purchase a property at a higher price, you will still not have to pay any stamp duty on the first £300,000.
This could also help existing homeowners, as many experts have predicted that house prices will rise within the coming year as a result of the policy.
How much will first-time buyers save?
It depends very much on the price of the house you are planning to buy.
The average price of property being purchased by first-time buyers in the UK is £207, 693. If you buy a house for this price following the stamp duty changes in November, you’ll be saving £1,654.