During the September mini-Budget, the former Chancellor Kwasi Kwarteng set out major changes to the thresholds for Stamp Duty Land Tax (SDLT), which have been retained following his removal from office.
Following these changes, the thresholds for first-time buyers have increased from £300,000 to £425,000 on property worth up to £625,000, while for everyone else, the threshold has doubled from £125,000 to £250,000.
But what does this mean for you?
The changes mean first-time buyers will now only pay SDLT on homes purchased for more than £625,000. Previously, the cap stood at £500,000.
At the same time, the threshold for first-time buyers to pay SDLT has increased from £300,000 to £425,000.
According to HM Treasury, that means a first-time buyer purchasing a home for £400,000 will now no longer pay any SDLT, rather than the £5,000 they would have been liable for under the previous regime.
Meanwhile, a first-time buyer purchasing a property for £600,000 will now pay £8,750 in SDLT rather than the previous £20,000 – a saving of £11,250.
Crucially, where homes are being purchased jointly, both parties must be first-time buyers to qualify for relief.
Home movers do not benefit from the same levels of relief as first-time buyers but will see savings of up to £2,500.
A home mover buying a property valued at £200,000 will now pay no SDLT but would previously have paid £1,500.
Buying a property at £400,000 would see the SDLT charge fall from £10,000 to £7,500 – a saving of £2,500.
Buyers of properties worth £600,000 will benefit from the same saving with the SDLT charge falling from £20,000 to £17,500.
Second home buyers, landlords and investors
Although landlords and investors also benefit in a similar way to home movers, they will still continue to need to pay an additional three per cent on the total purchase price of the property if they own another home.
There is an additional two per cent surcharge on top of this if the individual is considered an overseas investor.
Although rising interest rates have added additional costs to mortgages, the changes to SDLT still offer an opportunity for many individuals to acquire new properties at a lower cost.
Link: Stamp Duty Land Tax