What do the stamp duty cuts mean for my purchase?

On Friday 23rd September, the Chancellor of the Exchequer, Kwasi Kwarteng, announced various adjustments to Stamp Duty Land Tax. Let’s look at the changes.

What is Stamp Duty Land Tax (SDLT)? SDLT is a tax paid on all property over a specified price in England and Northern Ireland. Buyers in Scotland instead pay Land and Buildings Transaction Tax, while those in Wales pay Land Transaction Tax.

How much do you have to pay? The so-called ‘mini budget’ increased the residential nil-rate tax threshold from £125,000 to £250,000. The nil-rate threshold for First Time Buyers’ Relief was also increased from £300,000 to £425,000. Taken together, the adjustments mean that all buyers of residential property will pay less or no SDLT.

What impact will the cuts have on the market? It’s thought that the cuts will supercharge activity in an already busy buyer market, compounding the strain on housing supply. This was certainly the case with the stamp duty holiday, which was introduced to offset any pandemic-related lull in activity. Whether the cost-of-living crisis will counterbalance any spike in demand is yet to be seen.

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