The autumn budget has recently been one of the main topics of conversation. Announced on 22nd November 2017, the main points of the budget included additional funds for Universal Credit, money for the NHS, plans to build more than 300,000 houses a year, and £3 billion allotted for Brexit. However, the one that’s got everyone talking is the move to abolish stamp duty.
In the budget, the government announced that first time buyers will no longer have to pay stamp duty on homes worth up to £300,000. The stamp duty threshold previously sat at £125,000, meaning many more first time buyers will save. In fact, for young buyers who are struggling to get onto the property ladder, this will surely be welcome news, as they could save up to £5000.
In further good news, the Chancellor announced that the abolishment of stamp duty is to take immediate effect – a great early Christmas present for those currently in the process of buying their first home!
However, it may not be all positive. Some experts have speculated that getting rid of stamp duty could lead to rises in average house prices. This means first time buyers will have to save a larger deposit, thus effectively neutralising any benefits of stamp duty removal.
Fortunately, there is one city forecast to feel the biggest benefit from the abolishment of stamp duty: London. There are two main reasons for this: saving on higher value properties and a potential boost to the city’s property market.
Save on Higher Value Properties
In addition to no stamp duty on properties priced £300,000 or below, this new rule also applies to the first £300,000 of properties valued up to £500,000. This means that when buying a property worth £500,000, first time buyers in London will now only be subject to a 5% stamp duty on the £200,000 above the threshold – previously, buyers would have paid 2% between £125,000 and £250,000, and 5% on £250,000 to £925,000.
According to government statistics, the average price of a property in London currently stands at more than £480,000. As such, for those situated in the pricey capital, it just became a little cheaper to get onto the property ladder.
Boost the Market
While the London property market has always existed in its own little bubble, in September, it was reported that for the first time in 8 years, London house prices dropped, at the same time as every other region in the UK continued to see growth.
London property prices had only decreased by 0.6%, but with Brexit, many experts were speculating that the city’s property market could see further drops in 2018. However, the abolishment of stamp duty could boost the market, enabling more young first time buyers to own their home and counteracting the impact on Brexit. This is great news for estate agents like Hatched, who could sell houses faster.
While some have referred to the abolishment of stamp duty as a move to sway young voters, for first time buyers in London, it will definitely be a welcome move. Buyers could save thousands of pounds, helping them to get onto the property ladder earlier.