Stamp Duty Changes – What Does This Mean for London and How Much Will I Save?
This week, Kwasi Kwarteng, the Chancellor, announced changes to Stamp Duty in England and Northern Ireland in a mini-budget.
What is stamp duty?
You must pay Stamp Duty Land Tax (SDLT) if you buy a property or land over a certain price in England and Northern Ireland. You pay the tax when you buy a freehold property, a new or existing leasehold, a property through a shared ownership scheme or are transferred land or property in exchange for payment, for example, you take on a mortgage or buy a share in a house
How has stamp duty changed?
The Chancellor has made cuts to stamp duty. The threshold of how much a property has to cost before stamp duty is paid has doubled to £250,000. The table below sets out the bands and the relevant stamp duty rates.
|Property value||Stamp Duty Rate|
|Up to £250,000||Zero|
|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%|
Before the changes, first-time buyers paid no stamp duty on the first £300,000, this figure has now increased to £425,000.
What does this mean for London Properties?
According to the Government’s Land Registry, in June 2022 the average London property price was nearly 2.5 times the UK average at £537,920 compared to £286,397, so the increase in the threshold will definitely help London property owners when they move. Using the average house price, Londoners will save £2,500 on stamp duty from today.
What is even more interesting is the impact the changes will have on first-time buyers in London. The average cost of a first-time buyer property in London is £440,590 according to data from City Am and Direct Line. Using this as a guide, before today a first-time buyer would have paid £7,029 on a property in London. Now they will only pay £779 a saving of £6,250. In addition, for first-time buyers, the value of the property on which first-time buyers can claim relief is being raised from £500,000 to £625,000
When do these changes take effect?
In his mini-budget, the Chancellor confirmed that these changes would take effect from today (Friday 23rd September 2022).
Speaking in the Commons, the Chancellor said “The steps we’ve taken today mean 200,000 more people will be taken out of paying stamp duty altogether”.