As part of then Chancellor Kwasi Kwarteng’s mini-budget back in September, a cut to stamp duty was announced. It’s about the only change that has stuck, following a rapid succession of u-turns, resignations and new appointments. Whilst the announcement of Rishi Sunak becoming Prime Minister was greeted positively by the City and immediately steadied the rudder, Liz Truss’ short stint as PM created a volatile and damaging economic situation. Interest rates were raised, hundreds of mortgage products disappeared overnight and, combined with the hike in energy costs and inflation climbing, it has left many people worried about their financial security. The possibility that we’ll tip into a recession adds a further level of risk as redundancies will inevitably follow.
It’s not all bad news
Following the mini-budget, house prices fell by 0.9% in October, according to Nationwide – the worst monthly decline since the Covid-19 pandemic was at its peak. Property prices are now predicted to drop further according to Lloyds Banking Group. The lender predicts a fall of 8% in 2023 and stagnant prices for the next four years. Not great for owners but definitely good news for potential buyers. It may also mean that there is more housing stock available, because there will be some owners who, sadly, will lose their homes.
Where some lose, others will have an opportunity to gain and stamp duty is one way in which property buyers will benefit.
What are the new stamp duty rates?
For properties costing £250,000 or less the rate is 0%. If you’re buying a property that costs £250,000 – £925,000 you’ll pay 5%. The rate increases to 12% for properties costing £925,000 – £1,500,000 and for properties with a price tag of £1,500,000 and above the rate is 12%.
The great news for first time buyers is that there is no stamp duty payable on properties costing up to £425,000, with a discounted rate on properties costing up to £625,000. This will undoubtedly be welcomed by anyone trying to get their foot on the property ladder in London, Surrey and the home counties.
With prices predicted to come down and more favourable stamp duty rates, the initial financial outlay is likely to be lower than buyers were anticipating. It is one way of balancing higher mortgage payments and the increase in the cost of living – we have to look for silver linings where we can!
But much as everyone wants to limit spend right now, don’t forget that a building survey is an essential part of the house buying process! A thorough survey report will give you information you need to make an informed decision about the property – the confidence to go ahead with purchasing or and might just help you avoid a property destined to be a money pit or, better still, help you plan for future works that might need to be done on the house of your dreams.