WHAT DOES THIS MEAN FOR THE HOUSING MARKET IN MANCHESTER AND THE UK?
On the 23rd of September, the new chancellor, Kwasi Kwarteng, announced his mini-budget. The aim of the budget was to boost the UK economy’s growth and ease the burden on household budgets caused by rising living costs. One of the budget’s major announcements was the chancellor’s changes to stamp duty.
If you are in the process of buying a home or planning to move, you may be wondering how you will be impacted by the stamp duty changes. Here, we will dive deeper into the changes and how they affect home buyers.
WHAT HAS CHANGED WITH STAMP DUTY?
The stamp duty changes announced by the government have increased the stamp duty threshold. This means fewer people will need to pay stamp duty.
Before the changes, stamp duty charges were as follows:
- No stamp duty was payable on residential properties under £125,000.
- First-time buyers paid no stamp duty on residential properties up to £300,000.
Properties exceeding these value thresholds were charged stamp duty on the property’s purchase price above the thresholds. Property purchased between £125,001 to £250,000 paid stamp duty of 2%. The stamp duty rate increased as the property’s value increased, with homes sold for over £1.5 million paying stamp duty at a rate of 12%.
At the previous rate, buying a property for £250,000 would have incurred stamp duty charges of £2,500.
NEW STAMP DUTY RATES
The changes to stamp duty rates are as follows:
- No stamp duty payable on residential properties under £250,000.
- First-time buyers no longer need to pay stamp duty on properties under £425,000.
- This equals a saving of £2,500 for homeowners buying a property for £250,000.
WHEN WILL THE STAMP DUTY CHANGES COME INTO EFFECT?
The chancellor’s stamp duty changes came into effect on the day they were announced, the 23rd of September 2022.
HOW WILL THESE CHANGES AFFECT THE HOUSING MARKET IN THE UK AND MANCHESTER SPECIFICALLY?
Home buyers in Manchester and across the UK will welcome these stamp duty changes. A reduction in stamp duty will stimulate buoyancy in the housing market and reduce slow-down. However, with ever increasing mortgage rates things in the housing market are still looking a little unsure. You can also check out another interesting article comparing the housing market in Manchester and beyond from 2012 to 2022 here.
The Manchester housing market stands to be one of the biggest beneficiaries of purely the stamp duty changes. According to Zoopla, the average house price in Manchester over the past 12 months is £239,954. This falls below the stamp duty threshold which is great. This means a large proportion of Manchester residents will not need to pay stamp duty, therefore increasing house sales and boosting the local housing market.
HOW WILL THE CHANGE IN STAMP DUTY IMPACT FIRST-TIME BUYERS AND HOME MOVERS?
The stamp duty amendments are good news for first-time buyers and home movers, who can make significant savings during the purchase process. Saving thousands of pounds is an excellent way to encourage buyers to take advantage of the incentive and move house. This will free up existing housing stock, so enabling first-time buyers to get onto the housing ladder and for down-sizers to trade down, making more family homes available to buyers.
Please bear in mind that mortgage rates are on the increase even with stamp duty going down. The reduction is stamp duty could help buyers offset higher mortgage payments as you are saving money initially on the purchase. Make sure you do your research and and remember, you can always take some advice from a mortgage broker, adviser, your local bank and estate agents.