What will stamp duty changes mean for your house-moving plans?

This week’s headlines have focused on mortgage chaos and interest rates, but there is one piece of good news to watch out for.

Thousands of home buyers who completed their purchases in the last seven days have already benefited from the stamp duty cut announced by Chancellor Kwasi Kwarteng in his controversial mini-Budget, with property website Zoopla saying 43 per cent of all the houses on the market now don’t have a doorbell. duty at all.

The government says the cut will help stimulate the flagging economy and there are some signs it is working.

Savings: Thousands of homebuyers who completed their purchases in the last seven days have already benefited from reduced stamp duty

Rightmove says visits to its home listings spiked 10 percent just after the mini-Budget and the agreed sales number on Tuesday this week was the highest in one day since early August.

The website says that this week’s crashes (the amount of collapsed sales) are completely in line with long-term averages.

So, with all eyes on the real estate market, here’s what’s changing and what’s not…

What are the new stamp duty rates?

There is no tax on the first £250,000 of the property price, instead of £125,000. Higher-priced homes are left unchanged, so buyers pay 5 per cent tax on the £250,001 to £925,000 portion, then 10 per cent from £925,001 to £1.5 million. You pay 12 per cent on the price above £1.5 million.

Are they the same for first time buyers?

They pay no stamp duty on properties up to £425,000 (previously £300,000) and 5 per cent on purchases up to £625,000 (previously £500,000).

After this week’s furore, will the change be reversed?

Highly unlikely. The change began when the Chancellor spoke on September 23, so thousands have already benefited.

And Liz Truss doubled down on the cut ahead of this weekend’s Tory party conference, telling the BBC she is “very clear the government has done the right thing” in taking action “to deal with inflation, to deal with the economic slowdown and to deal with high energy bills.’

How much will we pay to move into a new £350,000 house?

Up to £250,000 now pays no stamp duty, a saving of £2,500 thanks to the Chancellor’s new move.

On the £250,001 and £350,000 portion you pay 5 per cent, which is £5,000. That means a stamp duty of £5,000 on the full price instead of £7,500, which is a saving of £2,500.

Will the cut cause prices to skyrocket?

Again, highly unlikely. First of all, £2500 is a practical sum but not enough to convince people who do not yet intend to buy.

Relief: Up to £250,000 now free of stamp duty – a saving of £2,500 thanks to the Chancellor’s new move

Second, it’s a permanent cutoff, not the temporary holiday we saw in the pandemic, so people don’t have to rush to buy right away.

And third, there are far more homes for sale today than there were earlier this year, so demand is not far ahead of supply and price increases are moderating.

Could sellers raise their selling prices?

It is possible, and some will, but it is not wise. With fears that interest rates could hit 6 percent next year, buyers are very cost-sensitive right now. An unreasonable selling price will mean your house sits on the shelf for months.

Will the haircut be wiped out by higher interest rates?

Forty percent of mortgage offers have been temporarily withdrawn; most will return with higher costs.

But remember, government figures show that 36 percent of homes are freehold with no mortgage.

Of the rest, it is estimated that three quarters have fixed interest rates, so there will be no immediate increase in costs.

For buyers in these groups, the stamp duty savings are genuine and not lost in higher mortgage payments.

I am planning to downsize, is there any help for me?

I’m not afraid. Many housing experts want stamp duty reduced to incentivize older homeowners to move to smaller homes, freeing up larger homes for families.

But aside from the chancellor’s general change in the threshold at which duty is triggered, there’s nothing custom for the retired or older homeowner.

Is Kwasi boosting vacation home owners and buyers?

With the cost of living crisis, these groups are not seen as a priority. So while they save up to £2,500 like everyone else, the 3 per cent stamp duty surcharge on buy-to-let and weekend cottages introduced in 2016 remains in place.

And, this week, the Labor Party hinted that there could be more taxes on landlords if it wins power.

What is happening in Wales and Scotland?

The Welsh stamp duty, called the Land Transaction Tax, changes on October 10, after which there will be no tax on homes under £225,000 (instead of £180,000), with small increases for homes of over £345,000.

There is no change to Scotland’s Land and Buildings Transactions Tax, but a budget north of the border on October 24 may change all that.