Chancellor of the Exchequer, Rishi Sunak, has today announced a stamp duty holiday for homebuyers, meaning any purchase up to £500,000 will be exempt from paying any tax.
Estate agent, Barrows and Forrester, has looked at what this means for homebuyers across the nation.
Based on the current average house price, some 96% of areas across England and Northern Ireland will now see the average homebuyer pay no stamp duty at all based in the current average house price there.
This stamp duty holiday equates to a saving of £2,465 for the average buyer in England and £312 in Northern Ireland.
Londoners are set to save the most regionally, with previous stamp duty tax owed on the average London home (£485,794) coming in at £14,290. The North East is home to the smallest saving at £39.
However, at local authority level, the most significant saving isn’t found in the capital in terms of paying no stamp duty at all. With a current average house price of £493,878, homebuyers in St Albans are now due to pocket a considerable £14,694 in stamp duty costs.
This saving also exceeds £14,000 in Windsor and Maidenhead (£14,525), Southwark (£14,430) and Mole Valley (£14,422), with homebuyers in Tower Hamlets, Guildford, Epsom and Ewell, Harrow, Sevenoaks, Ealing, Epping Forest, Brent, Waverly, Winchester and Tandridge all set to save more than £12,000 in stamp duty costs.
However, while homebuyers in these areas have seen the cost of stamp duty eradicated from their property transaction completely, those that are still looking at a stamp duty bill are set to save even more.
Of the 16 local authorities with an average house price above £500,000, the reduction in stamp duty costs on the first £500,000 of their property purchase means a saving of £15,000.
While the average buyer in Kensington and Chelsea will still pay an eye-watering £68,360 in stamp duty, it is at least, a slight reprieve for an area of the market that has mostly been ignored by previous initiatives.
Managing Director of Barrows and Forrester, James Forrester, commented:
“A bold move by the chancellor today and one that will no doubt stoke the fires of homebuyer demand with such a large proportion of those transacting due to benefit.
This shot in the arm should ensure top-line demand and price growth remain immune to any unseasonal downward trends and implementing this initiative from the get-go avoids any short-term decline in transactions.
The only criticism is, perhaps, that the government has once again focussed on fuelling demand rather than addressing the more pressing issue of housing supply. While this will help boost house prices, it will do little to address the supply and demand imbalance and the problem of affordability that many are already facing.”
Data on stamp duty saving for properties priced over £500,000 based on the following.
Existing Stamp Duty Land Tax based on current thresholds of 2% between £125k to £250k, 5% between £250k-£925k, 10% between £925k and £1.5m and 12% over £1.5m.
New Stamp Duty Land Tax based on 5% charged on £500k to £925k, 10% between £925k and £1.5m and 12% over £1.5m.