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Stamp duty cut to save homebuyers in England over £1bn

London’s largest independent lettings and estate agent, Bentham and Reeves have discovered the stamp duty cut announced last week could save homebuyers in England over £1bn a year.

Bentham and Reeves analysed sold price data on 574,091 properties they retailed over the last year, calculating the level of stamp duty that was owed versus the amount that would have been owed according to the new guidelines. 

Research shows the 574,091 homebuyers in England would have paid stamp duty up to £5.8bn.

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However, due to the recent cuts announced by Chancellor of the Exchequer, Kwasi Kwarteng, the total stamp duty now payable would be £4.8bn. This saves the public over £1.bn per year.

The saving comes because stamp duty will now no longer be paid on house purchases below £250,000, while first time buyers will only pay duty on properties above £425,000.

Cutting these costs will save the average homebuyer £2,500 and first-time buyers up to £8,750.

Marc von Grundherr, Director of Bentham and Reeves said: ‘Any saving will be warmly welcomed for those looking to climb the property ladder, particularly in the current economic climate.’

However, Mr Grundherr says the cuts to stamp duty will ‘do little to help homebuyers’ save for a mortgage deposit.

‘It’s fair to say that it will only add to the problem by fuelling demand and pushing house prices higher’, Mr Grundherr says, ‘the government maintains a head in the sand approach to housing delivery.’

James Hyman, Head of Residential at lettings and sales agency Cluttons also disagrees that the stamp duty cuts will benefit the housing sector.

Mr Hyman says it is ‘disappointing’ that the Chancellor has done nothing to help private landlords get back into the market.

‘The main reason rents have escalated so quickly over the last two years has been lack of supply,’ he said, ‘which has been driven by so many landlords being forced to exit the market.’

Mr Hyman says the best thing to help with the current housing crisis is ‘a reduction of the three per cent levy on second home purchases and reintroduction of tax relief for landlords, especially on improvements to their properties.’

However, house prices are set to soar following the Bank of England announcing they would increase their interest rates so inflation can hit it’s 2% target.

An increase in the cost of borrowing from the bank will impact house prices as the property market has been fuelled by cheap mortgage rates.

Virgin Money and Halifax have pulled their fixed mortgage deals for customers today.

The Director of Halifax Mortgages, Kim Kinnaird said: ‘With house price to income affordability ratios already historically high, a more challenging period for house prices should be expected.’

The current 0.5% increase in interest rates could act as a precursor to a fall in the housing market.

You can read ways the housing sector is trying to make homes more affordable here. Weston Homes are attempting to create energy efficient homes in hopes to lower bills should people decide to move.

Photo by Landon Martin

 

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