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Cuts to stamp duty sparks 45% rise in first-time buyers

Rishi Sunak’s stamp duty cuts have sparked a surge in the number of home buyers and prompted an all-out bidding war as people fight to get on the property ladder. 

The Chancellor last month gave prospective buyers a shot in the arm as he raised the threshold on stamp duty from £125,000 to £500,000 for those buying homes in England and Northern Ireland until March 31, 2021. 

The move was part of the Chancellor’s crucial coronavirus recovery package, giving buyers a six-month ‘holiday’ from paying the charge on most homes in a bid to kickstart the market and aide the recovery of the UK economy.  

In the wake of the announcement, the number of first-time buyers has increased more than any other type of purchaser – up by 45 per cent on last year, according to Hamptons International. 

And the number of applicants registering with a budget between £500,000-£750,000 has risen by a staggering 92 per cent year-on-year.

Nearly a third (30%) of homes sold since the stamp duty holiday had offers three or more buyers – up from one in four (25%) during the same period last year. Homes in Yorkshire & Humber are most likely to receive offers from multiple buyers, with 39% of homes in the region sold with offers from three buyers or more

The number of applicants registering with a budget between £500,000-£750,000 has risen 92% year-on-year, followed by those with a budget between £750,000-£1million

The number of applicants registering to buy in Great Britain has risen 38% in the month since the stamp duty holiday was announced on July 8, compared with same period last year

The number of applicants registering to buy in Great Britain has risen 38% in the month since the stamp duty holiday was announced on July 8, compared with same period last year

The number of applicants registering to buy in Great Britain has risen 38% in the month since the stamp duty holiday was announced on July 8, compared with same period last year 

What are the changes to stamp duty announced by Rishi Sunak?

From July 8 until March 31 2021, buyers in England and Northern Ireland will pay no stamp duty on the first £500,000 of their purchase when they move home.

The measure, which temporarily increases the ‘nil rate’ band of stamp duty from £125,000 to £500,000, will reduce the average stamp duty bill for a main home from £4,500 to zero. Buyers can potentially save up to £15,000.

If you buy a property over £500,000 amount, then you can still save money and can take off £15,000 what you would have paid prior to the announcement. 

Buy-to let investors and people looking to purchase a second home will also benefit from the changes.  

But it has also been suggested that some sellers may now be tempted to put their asking prices up due to the tax savings that buyers will be making. 

Stamp duty applies in England and Northern Ireland and people usually pay the tax on homes priced above £125,000.

The number of applicants registering to buy in Great Britain has risen 38 per cent in the month since the stamp duty holiday was announced on July 8, compared with the same period last year.  

London saw 55 per cent more first time buyers register than the same time last year, according to the analysis by Hamptons International. 

Applicants numbers rose in every region, with Scotland recording the biggest year-on-year uplift (up 77%), followed by the East of England (up 53%) and the South East (up 52%). 

But the price brackets where buyers can take advantage of the full £15k saving have seen the biggest increase. 

The number of applicants registering with a budget between £500,000-£750,000 has risen 92 per cent year-on-year, followed by those with a budget between £750,000-£1million.

Applicants registering to buy in country locations have risen the most, up 49 per cent compared with the same period last year. 

The number of first-time buyers increased more than any other type of purchaser. 

First-time buyers were already exempt on the first £300,000 of a purchase. 

Raising this to £500,000 would save them up to an additional £10,000. 

First time buyer numbers are up most in cities across southern England with London seeing 55 per cent more first time buyers register than at the same time last year. 

Nearly a third (30%) of homes sold since the stamp duty holiday had offers three or more buyers – up from one in four (25%) during the same period last year.

Homes selling for £750,000 to £1m have recorded the biggest year-on-year improvement, with homes selling with offers from more than three buyers rising by 13 per cent. 

The average home achieved 98.6 per cent of its initial asking price – a record high and up from 97.8 per cent during the same period last year.

The number of first-time buyers increased more than any other type of purchaser, despite being the group with the least to gain from the stamp duty holiday. First time buyer numbers are up most in cities across southern England with London seeing 55% more first time buyers register than at the same time last year

The number of first-time buyers increased more than any other type of purchaser, despite being the group with the least to gain from the stamp duty holiday. First time buyer numbers are up most in cities across southern England with London seeing 55% more first time buyers register than at the same time last year

The number of first-time buyers increased more than any other type of purchaser, despite being the group with the least to gain from the stamp duty holiday. First time buyer numbers are up most in cities across southern England with London seeing 55% more first time buyers register than at the same time last year 

MORTGAGE BORROWERS ‘MAY NEED TO MOVE SWIFTLY AS RATES CREEP UP’ 

A period of rock-bottom mortgage rates may be coming an end amid signs that rates are starting to creep up, according to analysis.

The choice of fixed-rate and variable deals is also shrinking, Moneyfacts.co.uk found.

There were 2,526 mortgage products in the market on August 1, marking a fall of 202 products compared with the 2,728 deals available at the start of July.

Moneyfacts said that, following historic lows reached last month, average rates are starting to increase.

Average two- and five-year fixed rates across all deposit sizes have increased by 0.09 percentage points since the start of July, to stand at 2.08% and 2.34% respectively.

Low-deposit loans, which lenders consider to be more ‘risky’, have seen particularly significant rate increases, Moneyfacts said.

The recent stamp duty cut and the reopening of the housing market after it was temporarily put on pause to help limit the spread of coronavirus has helped to encourage more buyers into the market in recent weeks.

Eleanor Williams, a finance expert at Moneyfacts.co.uk, said: ‘The introduction of the stamp duty holiday and record low average rates following an enforced period of shutdown for the market has seen demand for mortgages escalate in recent weeks.

‘However, product choice and availability remains a key issue for mortgage borrowers. Those looking to secure a new deal now may wish to move swiftly.’

The stamp duty cut, which temporarily increases the ‘nil rate’ band of stamp duty from £125,000 to £500,000, will reduce the average stamp duty bill for a main home from £4,500 to zero. 

It means buyers can potentially save up to £15,000.  

If you buy a property over £500,000 amount, then you can still save money and can take off £15,000 what you would have paid prior to the announcement.  

Property experts said the step could encourage some ‘missing movers’ back to the market. 

On the housing market, Mr Sunak said property transactions fell by 50 per cent in May and house prices had fallen for the first time in eight years.

Aneisha Beveridge, Head of Research at Hamptons International, said: ‘The introduction of the stamp duty holiday has given a further boost to the housing market which was already showing strong signs of recovery even before its introduction. 

‘The number of people looking to buy a home has risen across every region in Great Britain since the announcement, with Southern areas recording the biggest increase. It’s in these regions, where house prices tend to be higher, that buyers stand to gain the most from the holiday.

‘While it’s still early days, the data suggests that house prices seem to be stable, with homes under offer achieving a record share of their initial asking price. 

‘But perhaps contrary to expectations, it’s Northern markets which have performed most strongly. 

‘Price growth across the North has lagged significantly behind that of the South over the last decade, and with more capacity for prices to rise, perhaps this year will mark a turning point. It also demonstrates that there are longer-term factors influencing the market too.’

Homebuyers rushed online to look for their next home within half an hour of the Chancellor’s immediate stamp duty cut.

Rightmove reported a 22 per cent jump in traffic to its site within 30 minutes of Rishi Sunak confirming the cut in his mini-Budget on July 8. 

The property search website said the cut would produce savings of up to £15,000 in some regions of the country.

The average price of a home in the south east is £419,595, which would generate a saving of £10,980 as a result of the eight-month stamp duty ‘holiday’ announced by the Chancellor.

The biggest saving would be in London at £15,000, based on an average house price of £628,284. By contrast, the region that would see the lowest saving of £646 is the North East, where the average value of a home is £157,291.

Applicants registering to buy in country locations have risen the most, up 49% compared with the same period last year

Applicants registering to buy in country locations have risen the most, up 49% compared with the same period last year

Applicants registering to buy in country locations have risen the most, up 49% compared with the same period last year

Ms Beveridge added: ‘While the stamp duty holiday has boosted the market, the impact of two months lockdown shouldn’t be ignored either. 

‘Having spent more time in our homes, many households have decided to bring forward moves. 

‘With space topping buyers wish lists, demand for homes in the suburbs and country locations has increased the most, and it’s these homes that are most likely to sell above their asking price. 

‘Over the last decade house prices in cities have risen more than twice as much as those in the country, so this trend may mean the gap between city and country house prices will begin to close.’  

Could you save £15,000 on buying a home? The towns where homebuyers would benefit the most from a stamp duty cut revealed

By Myra Butterworth for MailOnline

The places where homebuyers could benefit the most from a proposed stamp duty holiday have been revealed, with potential savings of up to £15,000. 

The biggest potential savings on the tax bill for buying an average home outside of London would be in Surrey’s Dorking, Hampshire’s Lymington and Surrey’s Sunbury-on-Thames, according to Rightmove.   

Rightmove based its findings on the initial stamp duty threshold being raised to £500,000 and the data only included places where the current average asking price is between £450,000 and £500,000. 

The property website did not include first-time buyers in its analysis, as the savings would be lower for them due to stamp duty relief already in place – they pay no tax up to £300,000 and 5 per cent on the amount from £300,001 to £500,000. 

Maps show where the biggest savings are to be found both inside and outside of London

Big stamp duty savings: This three-bed semi-detached house in Dorking, Surrey, is for sale for

Big stamp duty savings: This three-bed semi-detached house in Dorking, Surrey, is for sale for

Big stamp duty savings: This three-bed semi-detached house in Dorking, Surrey, is for sale for  £495,000 via estate agents Cubitt & West

Another top area for stamp duty savings is Lymington, Hampshire, where this three-bed detached house is for sale for £499,999 via  Hayward Fox estate agents

Another top area for stamp duty savings is Lymington, Hampshire, where this three-bed detached house is for sale for £499,999 via  Hayward Fox estate agents

Another top area for stamp duty savings is Lymington, Hampshire, where this three-bed detached house is for sale for £499,999 via  Hayward Fox estate agents

THE BIGGEST POTENTIAL SAVINGS OUTSIDE OF LONDON
AreaRegionAverage asking pricePotential stamp duty saving
Dorking, SurreySouth East£498,422£14,921
Lymington, HampshireSouth East£498,326£14,916
Sunbury-On-Thames, SurreySouth East£498,088£14,904
Barton On Sea, New Milton, HampshireSouth East£497,853£14,893
Lewes, East SussexSouth East£491,304£14,565
Broxbourne, HertfordshireEast of England£486,701£14,335
Hove, East SussexSouth East£481,455£14,073
Oxford, OxfordshireSouth East£479,099£13,955
Leckhampton, Cheltenham, GloucestershireSouth West£477,518£13,876
Hertford, HertfordshireEast of England£477,431£13,872
Borehamwood, HertfordshireEast of England£476,791£13,840
Camberley, SurreySouth East£474,384£13,719
Egham, SurreySouth East£473,213£13,661
Bramhall, Stockport, CheshireNorth West£472,053£13,603
Fleet, HampshireSouth East£471,653£13,583
Wallingford, OxfordshireSouth East£469,082£13,454
Caterham, SurreySouth East£467,885£13,394
Wilmslow, CheshireNorth West£467,443£13,372
Tunbridge Wells, KentSouth East£467,145£13,357
Bath, SomersetSouth West£464,617£13,231
Cambridge, CambridgeshireEast of England£464,007£13,200
Chesham, BuckinghamshireSouth East£462,210£13,110
Caversham, Reading, BerkshireSouth East£460,747£13,037
Burnham, Slough, BerkshireSouth East£459,634£12,982
Tonbridge, KentSouth East£456,293£12,815
Hitchin, HertfordshireEast of England£453,389£12,669
Staines, SurreySouth East£452,219£12,611
West Malling, KentSouth East£450,553£12,528
Source: Rightmovee 
This four-bed detached house in Barton on Sea, in Hampshire, is for sale for £479,950 via Hayward Fox

This four-bed detached house in Barton on Sea, in Hampshire, is for sale for £479,950 via Hayward Fox

This four-bed detached house in Barton on Sea, in Hampshire, is for sale for £479,950 via Hayward Fox

Stamp duty savings are attractive in Broxbourne, Hertfordshire, where this four-bed house is for sale for £490,000 via William H Brown estate agents

Stamp duty savings are attractive in Broxbourne, Hertfordshire, where this four-bed house is for sale for £490,000 via William H Brown estate agents

Stamp duty savings are attractive in Broxbourne, Hertfordshire, where this four-bed house is for sale for £490,000 via William H Brown estate agents

Buyers in Dorking, Surrey, topped the list with a potential saving of £14,921, based on an average house price in the area of £498,422, according to Rightmove.

It is followed by Lymington in Hampshire, where the potential saving is £14,916, based on an average house price of £498,326.

In third place is Sunbury-On-Thames in Surrey, where the average house price is £498,088 and the potential stamp duty saving would be £14,904.

The top 10 ten locations also included Barton-On-Sea in Hampshire, Lewes in East Sussex and Borehamwood in Hertfordshire.

Rightmove also looked at the areas in London, with Orpington in Bromley topping the list of biggest potential savings.

Homebuyers in Orpington could save £14,893, based on a typical house price in the borough of £497,852.

Other places in London with the biggest potential savings include Burney Oak in Barnet, Chingford in Waltham Forest, and Sydenham in Lewisham.

THE BIGGEST POTENTIAL SAVINGS IN LONDON
AreaBoroughAverage asking pricePotential stamp duty saving
OrpingtonBromley£497,852£14,893
Burnt OakBarnet£497,839£14,892
ChingfordWaltham Forest£493,462£14,673
SydenhamLewisham£492,960£14,648
WalthamstowWaltham Forest£492,755£14,638
WembleyBrent£482,929£14,146
HarrowHarrow£482,691£14,135
Biggin HillBromley£478,702£13,935
BlackfenBexley£470,013£13,501
GreenfordEaling£465,798£13,290
DeptfordLewisham£465,670£13,283
Forest GateNewham£464,455£13,223
NorwoodCroydon£462,172£13,109
HounslowHounslow£460,371£13,019
HornchurchHavering£459,108£12,955
SuttonSutton£457,251£12,863
TottenhamHaringey£457,091£12,855
KingsburyBarnet£456,129£12,806
HestonHounslow£452,837£12,642
BarkingsideRedbridge£447,356£12,368
Source: Rightmove   
In Lewes, East Sussex, this three-bed maisonette is for sale for £490,000 via Cubitt & West

In Lewes, East Sussex, this three-bed maisonette is for sale for £490,000 via Cubitt & West

In Lewes, East Sussex, this three-bed maisonette is for sale for £490,000 via Cubitt & West

Before the stamp duty cuts, anyone buying a property in England or Northern Ireland that costs more than £125,000 and who isn’t a first-time buyer must pay stamp duty.

On lower value homes, the bills is relatively small. But high stamp duty rates on more expensive homes mean some buyers can pay huge sums.

For example, the stamp duty bill today for a £500,000 home is £15,000, rising to £43,750 for a £1million home and £93,750 for a £1.5million property.

Rightmove’s Miles Shipside said: ‘Buyers in higher priced areas with bigger deposits benefit most if the stamp duty threshold was raised to £500,000. 

‘A stamp duty holiday without better mortgage availability isn’t really helpful for hard pressed potential first-time buyers who are already mainly exempt from it anyway.’ 

Everything you need to know about stamp duty 

– What is stamp duty?

The Stamp Duty Land Tax was introduced in its current form in December 2013 and applies to people who buy a property or land over a certain price in England and Northern Ireland.

The previous threshold meant property costing over £125,000 is liable for the tax, although the 2017 Budget abolished stamp duty for first-time home buyers in England and Wales purchasing homes up to £300,000.

– What is the case elsewhere in the UK?

Wales and Scotland have their own arrangements.

Since the announcement, in Scotland the threshold for paying land and buildings transaction tax was raised from £145,000 to £250,000 from July 15 and in Wales it rose from £180,000 to £250,000 from July 27. 

– What were the stamp duty rates before the July 8 announcement?

For first-time buyers, there was no tax on places costing up to £300,000 and 5% on the portion from £300,001 to £500,000.

For those who have purchased a house before, it is a sliding scale and people pay on the portion of the property price which falls within each band.

The bands are: 2% on properties costing £125,001-£250,000, 5% on £250,001-£925,000, 10% on £925,001-£1.5 million, and 12% on any value above £1.5 million.

Buyers of second homes – whether buy-to-let or holiday homes – pay a 3% surcharge over the standard rate. 

– What has changed following the announcement?

In July the Government temporarily increased the threshold to £500,000, saving people up to £15,000 in stamp duty.

Analysis by Rightmove suggested that buyers in England’s Home Counties areas clustered around London would be particularly likely to make big savings, thanks to the uplift in the stamp duty threshold to £500,000.

It also found areas where the average price tag on a home is close to £500,000 include Dorking in Surrey (£498,422), Lewes in East Sussex (£491,304), Oxford (£479,099), Chesham in Buckinghamshire (£462,210), Borehamwood in Hertfordshire (£476,791) and Bath (£464,617).

– What could the impact be on the housing market?

Richard Donnell, research and insight director at Zoopla, said it would ‘provide a further boost to demand for housing’.

Stuart Adam, of the Institute for Fiscal Studies, said history showed that temporary cuts in stamp duty could provide an ‘effective fiscal stimulus’ to the economy. 

Treasury officials believe it could spark a much wider economic recovery, with many expected to use the tax savings to invest in their new home. 

Aneisha Beveridge, Head of Research at Hamptons International, said: ‘The introduction of the stamp duty holiday has given a further boost to the housing market which was already showing strong signs of recovery even before its introduction. 

‘The number of people looking to buy a home has risen across every region in Great Britain since the announcement, with Southern areas recording the biggest increase.’

It is hoped the temporary nature of the expected announcement will encourage people thinking about buying a house to enter the market.

Property experts said the step could encourage some ‘missing movers’ back to the market.  

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