The stamp duty threshold is set to be reduced from April which will mean more buyers will have to pay
The UK areas where first-time buyers are set to be hit with stamp duty costs the most have been revealed. The amount of first-time buyers in England and Northern Ireland who will be required to pay stamp duty will double from April.
The stamp duty threshold will reduce, with the “nil rate” band for first-time buyers falling from £425,000 to £300,000. Other home buyers will see a reduction from £250,000 to £125,000.
Property site Zoopla estimates the proportion of first-time buyers forced to pay the tax will jump from 21 percent to 42 percent. Existing homeowners buying a new home as their main residence who will be liable to pay stamp duty will also increase from 49 percent to 83 percent.
Around 79 percent of first-time buyers in London will be required to pay stamp duty from April 1, whilst around just 5 percent of first-time homeowners in the north west will need to pay the tax. This is because of the difference in the average price of a property in each region.
Overall, Zoopla estimates that the upcoming stamp duty changes could add an extra £1.1 billion annually in the tax to government coffers. The website’s analysis was based on buyer inquiries to estate agents and house prices, and excludes the impact of those buying additional homes.
Richard Donnell, executive director at Zoopla said: “Stamp duty has become a big source of tax revenue, approaching £10 billion a year for the Government. The reduction in tax reliefs from April will see more home buyers paying stamp duty.
“It’s positive that most first-time buyers will still pay no stamp duty from April, but these changes hit those buying over £300,000 in southern England the most, where buying costs are already high. This will reduce buying power and market activity at a local level.
“Stamp duty is a big tax on home movers in southern England, where affordability problems are already a major challenge. The case for reforming stamp duty remains, but the question is where to replace the multi-billion in annual tax revenues.”
Simon Gerrard, chairman of Martyn Gerrard estate agents, said: “These upcoming stamp duty changes will disproportionately affect first-time buyers in London, where housing is much more expensive, with 97% of sales set to pay stamp duty from April.
“In other areas, the impacts will be less pronounced. On the ground, we saw a big uptick in interest from first-time buyers in the last few months as they sought to get ahead of the changes, which will add thousands to the cost of buying a home.
“Some of the negative impacts may be offset by the Bank of England lowering interest rates, which will make mortgages more affordable, but it could also see house prices increase even further.
“The route onto the property ladder still contains so many barriers and the upcoming stamp duty threshold reductions will only aggravate an already dire situation.”
He suggested that existing stamp duty relief should be kept in place for first-time buyers, “or better still abolish it for first-time buyers”.
According to figures from Rightmove, the average asking price for a home has increased by 22 percent since November 2017, when the £300,000 first-time buyer relief threshold was introduced.
The typical price tag has increased from £302,630 in November 2017 to £367,994. Rightmove said there are now 28 percent more first-time buyers in London currently going through the sales completion process than at this time last year.
Here is the estimated percentage of first-time buyers who are liable to pay stamp duty from April, according to Zoopla:
North East: 2%
Yorkshire and the Humber: 3%
Northern Ireland: 5%
North West: 5%
West Midlands: 7%
East Midlands: 9%
South West: 20%
Eastern England: 50%
South East: 51%
London: 79%
Here is the estimated percentage of existing homeowners buying a new home who are liable to pay stamp duty from April, according to Zoopla:
North East: 40%
Yorkshire and the Humber: 56%
Northern Ireland: 59%
North West: 83%
West Midlands: 61%
East Midlands: 84%
South West: 90%
Eastern England: 95%
South East: 95%
London: 97%