What does the new Stamp Duty cut mean?

The announcement of the new stamp duty cut aims to increase growth in the housing market and help many first-time buyers get on the property ladder.

What happened to the first Stamp Duty cut?

In 2020, former Chancellor, Rishi Sunak, introduced a stamp duty holiday to soften the blow to the property market from the pandemic. This stamp duty holiday ended on the 30th June 2021.

How does stamp duty work?

We currently operate on Stamp Duty bands, which means that the more value your home has, the more Stamp Duty you pay. Previously, you would pay no Stamp Duty on the first £125,000 of a property purchase and the total you would pay was calculated off everything after this amount.

How much will the Stamp Duty cut save me?

Before today, first-time buyers would pay no Stamp Duty on homes worth less than £300,000 but these rates have now changed across the board, effective from the 23rd September 2022.

These are the new rates that Chancellor has proposed:

• The minimum threshold has been raised to £250,000
• The threshold for first-time buyers has also been raised to £425,000
• The value at which first-time buyers can claim relief has been raised to £625,000 from £500,000

The following are the proposed rates:

• £0-£250,000 = 0%
• £250,000 – £925,000 = 5%
• £925,000 – £1,500,000 = 10%
• £1,500,000 and over = £12%

According to GOV.UK, if you buy a house worth £600,000 as a first-time buyer. You’d be exempt for the first £425,000 of that, so you’d owe Stamp Duty on £175,000.

With the old rules you’d pay £20,000 but with the current rules you’d only owe £8,750, which is a saving of £11,250.

Want to explore your options?

If you’re on the market and looking for a new home but don’t know where to start, get in touch with one of our Advisors today, or book your appointment online.