The latest research by London lettings and estate agent, Benham and Reeves, has revealed that the stamp duty cut announced by the government in last week’s mini budget could save homebuyers across England over £1bn per year.
Last week, the government announced the biggest tax cuts seen in 50 years, with changes to stamp duty being one of them. Going forward, SDLT will only be payable on property purchases starting at £250,000, while first-time buyers will only pay the tax on purchases starting at £425,000 – a move that will save the average homebuyer £2,500, while first-time buyers stand to save up to £8,750.
But what does this potential saving mean for the market as a whole?
Benham and Reeves analysed sold price data for the 574,091 homes sold over the last year, calculating the level of stamp duty that was owed, versus the amount that would have been owed under the new guidelines.
The research shows that the 574,091 homebuyers to have completed on a property purchase across England in the last year paid stamp duty to the tune of £5.839bn.
However, had they benefited from the stamp duty cut announced last week, the total stamp duty payable would have been £4.810bn. That’s a potential saving of almost £1.029bn per year for homebuyers across England.
Regionally, buyers in the South East could stand to save the most, with the latest cuts reducing the stamp duty owed by £227.6m a year.
Homebuyers across London also stand to save the most, seeing the total level of stamp duty on an annual basis fall by £147.7m, with the East of England also estimated to see homebuyers enjoy a saving of £144.9m.
Even in the North East, where the potential saving is at its lowest, homebuyers still stand to save £24m a year as a result of last Friday’s stamp duty cut.
Director of Benham and Reeves, Marc von Grundherr, commented:
“Any saving will be warmly welcomed for those looking to climb the property ladder, particularly in the current economic climate and, collectively, the nation’s homebuyers stand to save a significant sum as a result of the latest stamp duty changes.
But it’s fair to say that today’s cut is fairly insignificant in the grand scheme of things and will do little to help homebuyers overcome the huge initial hurdle of saving that all important mortgage deposit.
In fact, it’s fair to say that it will only add to the problem by fuelling demand and pushing house prices higher, while the government maintains a head in the sand approach to housing delivery.”
Find out how much Stamp Duty you have to pay with our updated Stamp Duty Calculator here.
Property Transactions (Last 12 Months)
Stamp Duty Paid
Stamp Duty Paid at New Rates
Estimated Stamp Duty Saving per Year
EAST OF ENGLAND
YORKSHIRE AND THE HUMBER
Sold price data source from Gov – Price Paid Data
Potential stamp duty saving based on the sum of stamp duty owed across 574,091 individual transactions to have completed over the last 12 months across England (Aug 2021 to July 2022, versus what they would have paid with the new tax cuts in place. Stamp duty change info sourced from Gov – The Growth Plan 2022: Factsheet on Stamp Duty Land Tax
About the Author
Established in 1958, Benham and Reeves is one of London’s oldest, independently owned property lettings and sales agents. With specialism in residential sales, corporate lettings and property management in prime areas of London, the company operates from 19 prominently located branches and 11 international offices.