George Osborne, Chancellor of the Exchequer, announced a big shakeup to the housing market in his autumn statement, which could help lots of people, especially first time buyers, acquire their houses for less.
Stamp Duty Land Tax (SDLT) is the tax levelled at people purchasing property, and having to pay a percentage of the property value to the government. This has changed now though, in order to make it fairer for those buying small and medium sized houses.
Previously, SDLT had to be paid on any property over £125,001. At this point, it costs the buyer 1% of the total property value. This means that at £125,000, a home would cost nothing in tax, but at £125,001, it would cost £1,250.01 in tax.
This huge jump was seen as unfair, and got worse as there was another huge jump up when the property value reached £250,001 (where the buyers then had to pay 3% tax on the total property value).
This ‘slab system’ has long been contested as being unfair, and now the system has changed.
Instead of having such large increases, the system now works similar to income tax, in that it is graduated from certain set margins. This is good news for first time buyers, as it means a much fairer, less impacting tax.
First time buyer who are purchasing through the Help to Buy scheme will likely find this very beneficial, as it could potentially knock thousands of pounds off the amount of money that they will have to spend. Help to Buy mostly aids those who can’t save money for a deposit, so not worrying about paying the stamp duty land tax in addition should help to make more purchases possible.