It seems that despite recent Stamp Duty cuts being in the news, there’s still a lot of uncertainty about the changes and how they affect first-time buyers, according to research from online broker L&C Mortgages.
Almost a third of first-time buyers in England have no idea if the abolition of Stamp Duty on homes worth less than £300,000 will help them or not. Just over a fifth – 22% – are still making decisions on property purchases based on the “old Stamp Duty” bands and rules, meaning they could be seriously restricting themselves.
Not-so-blissful ignorance
L&C Mortgages found that many first-timers were woefully uninformed about the benefits of Stamp Duty relief. When asked how much they’d save if they bought their first home and paid no Stamp Duty, 13% believed they’d save more than £5,000, which is not possible. More than a third – 38% – of the respondents said they simply had no idea how much they’d save.
The survey also found that 52% of first-timers think they’ll benefit from Stamp Duty abolition when they buy their first home. Of the respondents looking to buy a property of between £125,000 and £500,000, 42% thought that Stamp Duty relief wouldn’t help them at all.
Many people want the cuts to go further
Most – 62% – of first-time buyers in England thought that the cuts didn’t go far enough and that property newbies shouldn’t have to pay Stamp Duty at all, regardless of the property price.
A complete abolition would mean big savings for many people, but it also shows how much simpler Stamp Duty would be if everyone paid the same rates.
The changes in action
At present, the changes mean that first-timers pay no Stamp Duty on properties selling for under £300,000. There are also reduced rates for homes between £300,000 and £500,000 for London properties – just 5% on properties between these brackets. For the average first-time London purchase of £410,000, this works out as £5,500 rather than the £10,500 it would have been previously. For homes above £500,000, Stamp Duty is at its usual rate.
In practice, around 95% of first-timers in England and Northern Ireland will benefit from the changes and 80% in London will also feel it. Overall, most first-timers will pay no Stamp Duty, saving an average of £1,650.
