- Stamp duty on the average UK home is now half the amount it would have been following changes made in the Autumn Statement, falling to £3,653
- Under the old system, the average UK home would currently cost £8,192 in stamp duty alone
- 98.3 per cent of buyers and movers will pay less in stamp duty as a result of December’s reforms
- Forecasts indicate the cost of stamp duty will continue to rise, but even by 2020 (to £5,750) it will remain below the levels seen before last year’s changes
- One in four prospective home buyers (26 per cent) have not budgeted for stamp duty costs in their plans to purchase a home
- Despite the improvement for the UK as a whole, three out of every five homes (60 per cent) still subject to higher payments are in London, due to sky-high house prices
The cost of stamp duty has fallen by more than half since the Government introduced new measures to help buyers in last year’s Autumn Statement, according to research from Post Office Money’s Cost of Buying & Moving study.*
The study, compiled by Post Office Money and the Centre for Economics and Business Research (Cebr), found that the stamp duty for the average home – previously calculated as a percentage of the overall property price – would have soared to £8,192 if the UK had maintained the previous system. However, measures announced in December’s Autumn Statement have seen the current average cost fall to £3,653.**
It is estimated the reforms will help 98.3 per cent of home buyers. This relief follows an astonishing increase of 319 per cent since 2004 (from £1,867 in Q3 2004 to £7,832 in Q3 2014). Forecasts indicate that the cost of stamp duty will continue to rise but even by 2020 the newly introduced measures will ensure that costs will remain below those seen in 2014 (to £5,750).
Commenting on the findings, John Willcock, Head of Mortgages at Post Office Money said: “There is no question that a significant number of buyers and movers will benefit from the recent measures designed to reduce the cost of stamp duty. However, there is still significant debate about whether more could be done to help people move up the ladder – with some even proposing to scrap the charge completely. Whether further changes happen or not, it is important that people consider all of the costs of buying moving and plan ahead, to ensure they are as prepared as possible.
Despite the impact of the recent improvements, half (49 per cent)*** of all prospective home buyers admitted that they were not aware of the current rules concerning stamp duty. One in four prospective home buyers (26 per cent)**** has also not budgeted for stamp duty costs in their plans to purchase a home.
John Willcock adds: “It is worrying that so few people fully understand stamp duty but this is also understandable – it’s a tax that has had many revisions over the years and many people will be more inclined to focus on the large deposit which they have mostly spent years saving for.
“The only way we can address the affordability of housing in the UK is by continuing to find innovative solutions to the costs faced by buyers and movers. As a provider, Post Office Money always seeks to create solutions to these problems wherever we can, with mortgages that include cashback offers and fee-free deals.”
Despite the improvement for the UK as a whole, three out of five homes (60 per cent) that are still subject to higher payments are in London due to the areas high house prices. Although the new measures have reduced the cost slightly, buyers in the capital will still foot an average bill of £14,920. Prospective homebuyers in Northern Ireland and the South West benefitted most from the new measures, with stamp duty costs falling by 72 and 67 per cent, respectively
|Stamp Duty||Under the old system (Mar 2015)||Under the new system (Mar 2015)||% difference|
|Yorkshire & Humber||£1,767||£1,033||-42%|
Regional stamp duty costs, before and after reforms
*Research taken from Post Office Money’s Cost of Buying & Moving study. Research carried out by Cebr on behalf of Post Office Money between September 2014 and March 2015. Figures used are taken from ONS House Price Index.
** The previous stamp duty system which uses the percentage associated with the price band that the property fell in. The latest data has been calculated using the reformed SDLT system which applies the rates proportionally so 0% on the first £125,000 of the property, 2% on any additional value up to £250,000, 5% between £250,001 - £925,000, 10% between £925,001 - £1.5 million and 12% value above £1.5 million (https://www.gov.uk/stamp-duty-land-tax-rates)
*** Research conducted by Opinium on behalf of Post Office Money between 24th April and 1st May consisting of 536 online interviews of UK adults looking to buy a home in the next three years.
**** Research conducted by Opinium on behalf of Post Office Money between 31st March and 7th April 2015 consisting of 598 online interviews of UK adults looking to buy a home in the next three years.
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