The stamp duty cut for first-time buyers was the big budget announcement that dominated the headlines recently, but what does it mean for you?
This announcement and cut gave first-time buyers hope that they really could make their dreams of buying a property a reality. However, it seems that the stamp duty cut did not live up to their expectations for first-time buyers and below we have explained why.
What is stamp duty and the cut?
Stamp duty is a tax that is paid on any domestic property that is purchased over a certain price. The tax is paid to the government when the domestic property is bought. You can pay the stamp duty yourself, but if you have a conveyancer acting on your behalf then they will do this for you on the day of completion.
Your conveyancer or solicitor will ensure that your stamp duty tax is paid on time and that the deadline is not missed. This gives you one less thing to worry about when buying a home and moving house.
The stamp duty tax was paid on domestic properties over the threshold of £125,000. The stamp duty cut meant that stamp duty tax is now not paid on properties up to the cost of £300,000. There is also stamp duty tax relief available to those purchasing homes up to the cost of £500,000, but is this really of benefit to first-time buyers?
How could the stamp duty cut make it more expensive for first-time buyers?
The OBR (Office for Budget Responsibility) stated that the stamp duty cut will actually push up the price of properties by around 0.3%. This is because those selling homes will put up the price of their homes to cover the cost of the stamp duty on the home they are purchasing. The stamp duty cut will, therefore, unfortunately, make homes more expensive for first-time buyers.
First-time buyers traditionally purchase homes below the £125,000 threshold anyway and tend not to buy a first home up to £300,000 or £500,000. Therefore, the main gainers from the stamp duty cuts announced in the budget are people who already own properties and not first-time buyers which the cut claimed to want to help.
While it will only become clear over time how effective the stamp duty exemption has actually been, it seems there could be new changes ahead. Experts predicted that as Boris Johnson came into power as the Prime Minister, the stamp duty tax could be paid by the seller of homes, and not the buyers. This is something to look out for when the Brexit situation has been resolved.
This could be another huge change for stamp duty tax, but only time will tell what really will happen.
If you would like to know about stamp duty tax and how it could affect you then why not call PDR Property Lawyers? We are here to help your property purchasing process run smoothly. Get in touch to find out more.