What you'll pay in pounds and what the experts say
After last week’s budget announcement that stamp duty for first time buyers has been abolished for those buying a home worth up to £300,000, we thought it was time for a quick reminder about what you’ll pay as a second or next time buyer.
What you’ll pay in stamp duty as a ‘next time’ buyer
Property value and stamp duty rate
Up to £125,000 - Zero
The next £125,000 (the portion from £125,001 to £250,000) - 2%
The next £675,000 (the portion from £250,001 to £925,000) - 5%
The next £575,000 (the portion from £925,001 to £1.5 million) -10%
The remaining amount (the portion above £1.5 million) - 12%
Example: If you buy a house for £275,000, the stamp duty you’ll pay is calculated as:
• 0% on the first £125,000 = £0
• 2% on the next £125,000 = £2,500
• 5% on the final £25,000 = £1,250
• Total SDLT = £3,750
What you’ll pay if you’re a first time buyer
You don’t pay any tax up to £300,000 and 5 percent on the portion from £300,001 to £500,000.
If the price is over £500,000, you follow the rules for people who’ve bought a home before.
When asked about the new stamp duty rules Mark Hayward, chief executive, NAEA Propertymark said that it will have a positive impact on the market.
“It’s a smart move to ensure the dream of homeownership for young people can become a reality and will help buyers across the UK, including London and the South East where property prices are higher.
“We do however need to realise that this move will increase the demand for FTB properties and if we don’t have the supply it will push prices up. We have seen this in areas where Help to Buy is offered, as it attracts a great deal of interest from FTBs.”
The move has already had an impact on some house builders’ decisions. For instance, Bloor Homes has announced that it will be freezing prices on all homes at its 60 developments across the country until February 2018.
The builder says that despite meaning a saving of £1,660 for the average first-time buyer, the Office for Budget Responsibility has predicted that the move would simply push up prices and negate the saving.
Michele Rose, regional sales director of Bloor Homes Midlands, said: “The Chancellor’s decision to cut stamp duty for first-time buyers was a welcome move to help people achieve their dream of climbing onto the property ladder, and it is vital that the intended benefit from this change is not cancelled out by a sudden rise in house prices.
“Any increase in prices will affect not only first-time buyers, but the market as a whole, including purchasers who will not benefit from the stamp duty reforms.
“We hope [the freeze] will provide confidence and certainty to our buyers that they will feel a tangible benefit from the stamp duty changes.
“As a housebuilder, we sometimes pay stamp duty on selected plots and a number of our buyers who have yet to exchange were due to benefit from this offer.
"As stamp duty will no longer be payable on some of these properties, we have decided to pass any saving resulting from the stamp duty reforms to our customers.”
The move was met with a cautious air of optimism by local estate agent Chris Charlton. Chris, head of residential sales at Savills Nottingham, said: "The reduction on stamp duty may assist in tempting more buyers in to the market but the lack of supply is likely to continue to impact on the market in 2018 and beyond.”
He added: “Without a coherent longer term housing strategy that reaches across party politics and the relatively short term outlook and strategies that successive governments try to implement, the longer term outlook for affordable housing supply will continue to be challenging.
"Many older home owners in larger family properties may not yet be encouraged to move with the uncertainty of the Brexit plans and the economic outlook still a major factor in their decision making.
“It is important that any new land releases for residential development are in areas where people actually want to live and local infrastructure is in place to accommodate those needs.