Anyone who has bought or sold a property will have come across stamp duty land tax (SDLT), levied in England and Northern Ireland on house purchases above a certain value and based on the price of the home being bought.

The new chancellor, Kwasi Kwarteng, in his mini budget held towards the end of September 2022, announced significant policy changes to this tax and the way it works.

Essentially, the threshold at which buyers have to pay this duty has increased from £125,000 to £250,000. Under the previous arrangement, the first £125,000 of a property’s value was not liable for the tax. Thereafter, purchasers paid 2% of the value of home up to a £250,000 threshold. Buyers would then be charged 5% on the portion between £250,001 and £925,000. This doubled to 10% for the proportion to £1.75m, i.e. the next £575,000. For the proportion above £1.5m, stamp duty would be levied at the rate of 12%.

Under the new arrangements introduced by the chancellor, there’s no stamp duty on the first £250,000 of a property’s value. Buyers pay 5% of the value between £250,001 and £925,001, while the two higher tiers remain unchanged.

In another significant move aimed at helping first-time home owners, the level at which this group must pay stamp duty land tax has gone up from £300,000 to £425,000.

If you’re buying a house how will this affect you?

If you’re currently in the throes of purchasing your next home, the new arrangements now apply, and so you should benefit from the tax break immediately. Talk to your solicitor and be sure you are indeed taking advantage of this.

As reported on the industry website Estate Agent Today, the cut is due to save the average homebuyer £2,500, while first-time buyers are set to save up to £8,750. Equally, one London agency has predicted that, across England, those buying homes could collectively save over £1bn.

Estate Agent Today also reports that buyers in the south east stand to save the most, with the most recent cuts axing the tax burden by an annual £227.6m.

Meanwhile, research from one Midlands-based agency suggests the UK’s property market could be in for a 25% boost as thousands of us look to cash in, based on previous SDLT holidays.

What are the experts saying?

The easing of pressure on buyers has been welcomed in many quarters, although a shortage of housing stock remains, and there are some concerns the move could prompt a spike in prices by fueling demand.

Despite this scepticism, however, some research by Alliance Fund indicates that the recent mini-budget could increase new housing delivery by up to 16% across England.

What Oakfield says

Here at Oakfield, while understanding there is some scepticism, we warmly welcome the changes to SDLT.

Sales director Kerry Newstead says:

“In particular, we welcome the fact that the cut is not time-limited, unlike previous ‘holidays’ for this duty, which have led to scrambles to beat the cut-off date. We believe the tax cut will stimulate growth by encouraging more people to make their next move, while in particular giving more first-time buyers a leg-up on to the property ladder. Indeed, we believe everyone purchasing a new home will feel the benefit of the changes.”