New stamp duty relief introduced by the government has saved first time buyers £2,300 on average when buying their first home.
The government recently abolished stamp duty land tax (SDLT) on properties valued under £300,000 saving first time buyers £2,300 to get on the property ladder.
Official statistics show the amount of relief from the start of the new policy in November 2017 and March this year amounts to £159 million in total.
Over the next five years it is estimated that 1 million first time buyers of properties up to £500,000 will benefit from the stamp duty cut.
Half of savings from the South East
From the total stamp duty saved of £159 million, London had the largest at £40 million or 25% saving with the South East at £38 million or a 24% saving.
First time buyers in London saved the most at £4,300 compared to the average of £2,300 and the lowest in Northern Ireland saving only £800.
The following table shows the previous and new stamp duty paid by first time buyers for different property values and the savings they can expect:
| Property value | Previous duty |
New duty |
Saving |
|---|---|---|---|
| £200,000 | £1,500 | £0 | £1,500 |
| £300,000 | £5,000 | £0 | 5,000 |
| £400,000 | £10,000 | £5,000 | £5,000 |
| £500,000 | £15,000 | £10,000 | £5,000 |
Chancellor Philip Hammond abolished stamp duty from November 2017 for first time buyers on properties worth less than £300,000.
To qualify you must have never owned a property in the past, intend to use it live in yourself paying nothing on the first £300,000 and 5% on the balance up to a maximum value of £500,000.
This means home movers and buy-to-let investors are excluded from the policy although it may be easier for remortgage buyers to stay in your existing home if you can and avoid stamp duty.
Majority pay no stamp duty
The majority of 69,000 first time buyers do not pay any stamp duty with 54,600 purchasing homes worth under £300,000 and the South East region had the highest number at 9,000.
There were 14,400 purchasing properties with a value of £300,000 to £500,000 and London had the highest number paying 5% stamp duty at 6,100.
Existing homeowners can avoid stamp duty by staying where they are and remortgage buyers could increase their loan to release capital which they can use to improve their home.
The older homeowner no longer needs to downsize causing them to pay stamp duty and instead the equity release mortgage buyer can access wealth to maintain their lifestyle or pay for care at home.
In addition to the stamp duty policy, 387,000 people have used the government’s Help to Buy Scheme and over 1.1 million have opened accounts with the Help to Buy ISA.
Housing Minister Dominic Raab said it is good to see a record number of people benefiting from our Help to Buy Equity Loan so they can realise their dream of home ownership.
What are your next steps?
Call our LCM mortgage brokers for advice if you are a first time buyer, want to remortgage your existing home for the best mortgage deal, moving home or are a buy-to-let investor.
For equity release buyers our London City Mortgage advisers can recommend lifetime mortgages allowing you to receive cash from your property for home improvements, holidays or even reduce inheritance tax owed by your beneficiaries.
Start with a free mortgage quote or call us and we can take your details. Learn more by using the property value tracker chart, mortgage costs calculator and equity release calculator.
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