Stamp Duty Land Tax is a tax paid when purchasing a freehold, leasehold or shared ownership residential property over £250,000 in England and Northern Ireland (separate taxes apply in Wales and Scotland).
The measures introduced by the government increase the amount a purchaser can pay for a residential property before they become liable for Stamp Duty while maintaining the higher rate of 3% on additional dwellings.
The measure increases the residential nil-rate tax threshold from £125,000 to £250,000 for people buying their next home. While the nil-rate threshold for First Time Buyers’ Relief is increased from £300,000 to £425,000 and the maximum amount that an individual can pay while remaining eligible for First Time Buyers’ Relief is increased to £625,000.
An analysis was made of the average Stamp Duty paid across more than 90 of England’s largest towns and cities before and after the cut was announced and found that buyers in Reading, Stevenage and Weston-Super-Mare are tipped to see the biggest savings.
Property buyers in the top ten locations will now make an average saving of almost £2,500 on their purchases. The average Stamp Duty of £5,405 paid in the UK in the last 12 months will now drop to £3,405 based on current house prices.
Buyers in other locations that will almost make the highest saving possible are in London, Chester, Brighton, Leeds, Poole, St Albans and Bristol. Birkenhead, Hartlepool and Blackpool came bottom of the list for savings, with property buyers in Birkenhead on average making a saving of just £177.
Mike Connelly, director of conveyancing software provider Legal Bricks, an Access Legal company, said: “It’s clear from the research that there are property buyers in some areas who will benefit from the cut more than others.
“Will this have a huge impact on the market like the reductions in 2020 and 2021? I don’t think I’m alone when I say, I can’t see that happening. The economic crisis before us seems to be looming large in people's thoughts, and as such, I’m eagerly waiting to see If these measures are enough to scratch the surface, when combating the impending interest rate increases, and increased cost of living. That said, small incremental and sustainable measures are a much better solution to the housing market than short-term fixes.”
The research also reveals a clear North-South divide, with the 10 areas that make the smallest savings all in Yorkshire, the North East or the North West. While buyers in the locations that are making the biggest savings are located in the South - with Leicester as the only one in the Midlands.
It also means that many of those looking to take their first step on the property ladder in some locations will make significant savings on Stamp Duty.
First-time buyers in Woking, Oxford and Bath will make the biggest savings on Stamp Duty with just shy of £11,250. It is yet to be seen whether the cut will mean a significant increase in activity for conveyancers in England, like the Stamp Duty holiday seen at the height of the pandemic.
However, Mike thinks the response to the cut by conveyancers has been generally positive and concluded: “I feel this measure has been well received by conveyancers, who on the whole, were extremely concerned by another short-term reduction in SDLT, in order to stimulate the housing market. The fact that the government has increased SDLT thresholds, is more reflective of where we are post-pandemic for property prices. This will now shift a number of first-time buyers completely out of the SDLT metric, even in London, which has to be a positive measure.”
