Are first time buyers starting to see the benefits of stamp duty reforms?
According to the latest research, first time buyers are now able to commit an increasing amount of money to the deposit on a new home.Over the past year, a great deal of effort has gone in to addressing problems within the housing market. It now appears that new regulations are beginning to have a positive effect.
What is behind the trend?
The changes to the way stamp duty land tax is calculated and annual wage increases are thought to be major contributor to the increase in the amount of money committed to fist time buyer deposits.In December 2014, the government announced an overhaul of the stamp duty system. The aim was to ensure that homebuyers were not exposed to sudden increases in stamp duty tax as the price of a property increased.For example, if you were to purchase a property at the average house price in the North West*, you would have previously been required to pay around £1,500 in stamp duty. However, under the new rules, that figure would reduce to just over £500.These changes are thought to be allowing many first time buyers to put those savings towards the cost of a deposit.
How many homebuyers are benefiting?
According to figures from Nationwide Building Society, 51% of homebuyers in the North West are expected to benefit. In addition to this, the average saving in the North West per home is reported to be £1,290.Rob Wyke of Mortgages 65 reflects on the positive growth of the economy, coupled with this latest break for first time buyers: 'Due to the recent stamp duty changes and the economy steadily picking back up, the mortgage industry can now grow on a positive footing with a much more sensible approach to stamp duty in place.'The mortgage market has pulled through what has been quite a turbulent year with great prospects for 2015, especially for first time buyers.'It's likely that we'll see further adjustment later in the year, as lenders become more comfortable operating under the changes made as a result of the Market Mortgage Review and continue offering prudent loans to a wider range of consumers.â?
More flexibility for first time buyers
If you are buying a house in 2015 the tax man is likely to be taking a much smaller fee. This can offer you greater flexibility, with many seemingly putting towards the cost of a deposit.Ian Bythell, Director of Petty Estate Agents Burnley, shares his thoughts: 'The stamp duty overhaul will be welcomed by those struggling to get on the property ladder, or looking to buy a new home just above one of the old thresholds.'First time buyers and second steppers often see a sizeable chunk of their equity siphoned off to the Treasury, which makes it harder for them to raise the deposit needed to get the mortgage they require to get on or trade up the housing ladder, so this move is one we support.â?
Here is an overview of what stamp duty you will now pay when purchasing a new home
- 0% on the first £125,000 of the property price
- 2% on the next £125,000
- 5% on the next £675,000
- 10% on the next £575,000
- 12% on the rest (above £1.5 million)
So, if we take a purchase price of £280,000 (which stretches to the third threshold) you would pay 0% on the first £125,000, 2% on the next £125,000 and 5% on the final £30,000. This would lead to stamp duty costs of £4,000 compared to the £8,400 you would be required to pay out under the old system.Head of Conveyancing at Farnworth Rose Solicitors, Helen Robinson, comments: 'We are hopeful this upturn in the housing market will continue into the foreseeable future. For now, the new stamp duty reforms have certainly helped kick start first time buyers efforts to get their foot on the ladder.'Here at Farnworth Rose we are optimistic about what the future holds in the mortgage market and we can provide expert residential conveyancing advice to anyone who is thinking of buying a residential property at highly competitive, affordable ratesâ?.
Contact Farnworth Rose Solicitors today
If you are thinking of a purchasing a new home, make the most of the latest stamp duty reforms and speak to one of our specialist residential conveyancing solicitors.For a clear-cut quote from a conveyancing expert, call Farnworth Rose on 01282 695 400.Or, get your quote online today by clicking the button below to complete our quick conveyancing quote calculator. Farnworth Rose Limited, All Rights Reserved.