‘It’s bittersweet’: what home-buyers think of chancellor’s stamp duty cut | Stamp duty

The UK Chancellor, Kwasi Kwarteng, has announced a permanent reduction in stamp duty on property purchases in England and Northern Ireland, a move that is part of a mini-budget critics say it will reward the wealthy more than the low-income.

Under the new system, effective from Friday, the first £250,000 of a property’s value will be exempt from stamp duty. Buyers will pay 5% of the value of the home from £250,001, while the part between £925,001 and £1.5 million will remain taxed at 10%. Any property worth more than that will be subject to stamp duty rates of 12%.

The threshold at which first-time buyers start paying stamp duty will increase from £300,000 to £425,000, and the maximum value of a property on which first-time buyer relief can be claimed will also increase, from £500,000. sterling to £625,000. .

Here, four people from different parts of the country explain how the changes could affect them.

The first time buyer

Ellie Stevens, a local government grants administrator, postponed the exchange of her first property purchase in the hope that a stamp duty cut would be announced and will now save £5,000.

Ellie Stevens, 29, fears the stamp duty reduction will make it harder for people like her to buy a home in the long term. Photo: Ellie Stevens/Guardian Community

Stevens and her partner, a graphic designer, both 29, have been renting in Bristol for seven years and have been trying to buy a house for a year.

“This cut is very good news for us personally. It’s a year’s worth of savings for me. But I do think this will make it more difficult for people like us to buy a home in the long run. The real estate market here is already totally crazy. We have submitted offers on 10 houses, always 10% above the asking price, and only two were accepted,” says Stevens. “For each property, there were at least 15 interested buyers.”

During the pandemic, house prices in Bristol have skyrocketed, in part, Stevens says, due to Rishi Sunak’s temporary stamp duty holiday.

“We had to offer £50,000 on top of the asking price to secure this place. I don’t think anyone in our chain will raise their prices as a result of these tax cuts, but if this offer had failed, we would have been taken from Bristol and moved out of town due to rising mortgage rates. and prices.”

the family that grows

For Chris, 36, an IT engineer at a trading company, the stamp duty cut is “bittersweet”.

Chris
Chris says the stamp duty cut is “bittersweet”. Photography: Guardian Community

On the one hand, Kwasi Kwarteng’s announcement affirmed Chris’ decision to expand his two-bedroom home in Walthamstow, northeast London, which his two young children have begun to outgrow.

“My wife and I moved here with our kids six years ago, but now it’s not big enough for us,” he says. “We have discussed an extension, but decided there is no point if we can just move. So the idea was to explore that next year. We have had an assessment and that is the most serious thing we have. But the stamp duty cut is another reason to go ahead.”

Chris says he’s not worried about home prices going up as a result of the cut. “Whatever [price changes] happens to a new house, it will be happening to our house. We are not first time buyers so I take the hot or cold market with a pinch of salt.”

However, Chris has reservations about the government’s broader economic plan. “Despite [the stamp duty cut] it will benefit me, I share the concerns that we as a country are borrowing a lot of money. But I guess I just have to get on with what we have to do as a family.”

second home buyer

Rajinder Singh, 34, a mortgage broker from Coventry, bought his first house 14 years ago and is looking to buy a larger second property to move in with his wife and children. He has calculated that he will save £2,500 and sees the stamp duty reduction as “positive”, although he had hoped for something more similar to Rishi Sunak’s stamp duty holiday in July 2020.

Rajinder Singh
Rajinder Singh believes the move is aimed at first-time buyers. Photography: Guardian Community

“I will see a slight reduction in my stamp duty, but not as much as perhaps I expected based on what happened just after the first shutdown. With the changes the previous chancellor put in place, I would have saved substantially more, so I think these reductions are more geared towards first-time buyers.

“I’m lucky in the sense that I don’t have to sell my property, it will be rented out through a rent-to-own mortgage. I can buy the next one using part of the capital that I have.”

Singh doesn’t think house prices will rise after the stamp duty cut in the same way they did in 2020, despite recent warnings from analysts. “That stamp duty reduction came into effect at a time when we had just come out of lockdown, when there was a lot of pent-up frustration and people had saved money. It was just the perfect cocktail for a massive increase in property prices. I don’t think this is going to have the same effect.”

The seller

Robert Hughes, A retired civil servant, he has been trying to sell his Lincolnshire home for a while, and is hoping stamp duty cuts will help revive a sluggish property market in his area.

“Our house has been on the market for a few weeks, we lost a buyer because the chain collapsed. We would like to get closer to our children. Judging from sites like Rightmove, it’s clear that fewer properties are coming to the market in this area and properties are sitting unsold for much longer. Many sellers have been lowering their prices here lately as higher interest rates and rising inflation reduce the desire to make large individual investments.

“I believe that today’s stamp duty reductions are correct and will stimulate the housing market, while other pressures, such as interest rates and inflation, would slow the increase in house prices, although in the long term the House prices could increase due to this cut. It’s a bit of a crystal ball situation. It is also true that many people can now spend the savings on home improvements, stimulating the economy. All in all, I think this is a good thing that will provide a much-needed short-term economic boost.”

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