Stamp duty is payable by the buyer of property and is based on the cost of the property purchased.  From today – 23 September 2022, no stamp duty will be paid on the first £250,000 of the cost of a property.  That is an increase from £125,000.  For first time buyers, no stamp duty will be payable on the first £425,000, an increase from £300,000.

The standard rate of stamp duty from today is, therefore:

• Up to £250,000  –  0%
• £250,001 – £925,000  –  5%
• £925,001 – £1.5 million  –  10%
• Above £1.5 million  –  12%

As well as the increased tax-free rate of £425,000 for first time buyers, they will continue to benefit from tax relief on a higher amount, the level of which also increases from today.  They will now pay 5% stamp duty on anything above £425,001 up to £625,000.  That higher level is an increase from £500,000.  First time buyers then pay the standard stamp duty on anything above £625,000.

It is expected that the cut will stimulate demand for property, which has slowed recently, and enable more first time buyers to get on the housing ladder as it did during the stamp duty holiday previously introduced by the government between July 2020 and September 2021, when the property market surged.  This surge led to increased demand, reduced supply and rocketing house prices, which according to the Office for National Statistics, rose by 15.5% in the year to July 2022.

There are many indicators on the current state of the property market, with HMRC showing a still strong market and sales in July 2022 at 6% above the average for the same month in 2018/2019.  Residential property data analytics company, TwentyCI, shows that sales agreed in the same month are 8% above the same month in 2018/19.  However, mortgage approvals are down 9% over the same period according to the Bank of England.

Caroline Murray, partner and head of Graysons’ property team says:

“This is certainly good news for buyers, especially those who are trying to get on the property ladder for the first time.  The cut is effective from today, which means that many people who are part way through their transaction will make savings.  I certainly expect this incentive to result in an  increase in the number of people looking to buy property, but, of course, we have yet to see what effect it will have on house prices and whether the Bank of England’s increase in interest rates – to 2.25% yesterday – will hold people back.”

If you are looking to buy or sell property, contact our experts now, or get a free, no-obligation quotation using our online quotation system.

Author: Caroline Murray, partner and head of our property team.