Chancellor George Osborne has made the decision to reintroduce the stamp duty land tax rate for first-time buyers.
Stamp duty was first introduced in December 2003 by the Labour party which is a percentage tax paid on the purchase of a home or non-residential property. Currently first-time buyers don’t pay stamp duty on purchases of properties worth £250,000 or less.
The break from paying the tax for first-time buyers first began in March 2010 which eased the pressure of buying a property. It has saved most first-time buyers on average £2,500 which has saved them £319 million overall.
Research has shown that nearly 300,000 people have benefited from not paying the tax. HSBC carried out research from when the stamp duty began and 331,899 first-time buyers bought a property with 89% of them purchasing properties priced at £250,000 and under.
The announcement that the tax will be reintroduced was first made in the Chancellors Autumn Statement in November 2011 after it was revealed the holiday of the stamp duty cost had not helped many people to buy a home, which is what it was originally set out to do.
From the 24th March 2012 the stamp duty holiday will expire and after this date only purchases under £125,000 will not have to pay the stamp duty cost. For those that will have to pay, it will be charged at increasing rates which start at 1%.
A rise in first-time buyers is expected over the next month before the stamp duty cost is reintroduced to avoid paying the 1% charge.
Peter Dockar, Head of Mortgages at HSBC spoke about the results saying: “We have seen a 20 per cent increase in approvals for first-time buyer loans in the first six weeks of the year as they rush to take advantage of the stamp duty holiday.”
© Copyright Autonet Insurance
By Amanda Bainbridge