The Government’s Stamp Duty cut in last week’s ‘mini budget’ could save homebuyers over £1bn per year, research by lettings agent, Benham and Reeves, has revealed.
Last week, the Government made the largest tax cuts seen in over 50 years, making substantial changes to Stamp Duty.
Moving forward, Stamp Duty Land Tax (SDLT) will only be payable on property purchases above £250,000, while first-time buyers will only pay the tax on purchases starting at £425,000.
This move aims to save the average homebuyer up to £2,500, while first-time buyers stand to save approximately £8,750.
Marc von Grundherr, director of Benham and Reeves, said: “Any saving will be warmly welcomed for those looking to climb the property ladder, […] the nation’s homebuyers stand to save a significant sum as a result of the latest stamp duty changes.”
But what do these savings mean for the market as a whole?
Benham and Reeves have analysed sold price data for the 574,091 homes sold over the past year and calculated the level of Stamp Duty that was owed, versus the amount that would have been owed under new guidelines.
From this pool of 574,091 homebuyers, the research revealed that they paid an average of £5.839bn on Stamp Duty.
However, had they benefited from the Stamp Duty cut, the total stamp duty payable would have been £4.810bn.
That’s a potential saving of almost £1.029bn per year.
Regionally, buyers in the South East could stand to save the most, with the latest cuts reducing the duty owed by £227.6m a year.
Homebuyers across London also stand to save a significant amount, seeing the total level of duty on an annual basis fall by £147.7m, with the East of England also estimated to see a saving of £144.9m.
Even in the North East, where the potential saving is at its lowest, homebuyers still stand to save £24m.
But will these notable savings out-weigh the potential damage that this cut could inflict upon the already volatile property market?
Von Grundherr said: “Today’s cut is fairly insignificant in the grand scheme of things and will do little to help homebuyers overcome the huge initial hurdle of saving that all important mortgage deposit. In fact, it’s fair to say that it will only add to the problem by fuelling demand and pushing house prices higher, while the government maintains a head in the sand approach to housing delivery.”
