The UK government has dropped its plan to abolish the 45% rate of income tax after Chancellor Kwasi Kwarteng acknowledged that it was proving a “massive distraction”
The Chancellor, Mr Kwarteng announced a series of tax cuts and changes in his mini-budget on September 23 for property sales in London, before performing the U-turn.
The price at which Stamp Duty Land Tax starts to be payable on London property for sale purchases in England and Northern Ireland has doubled, from £125,000 to £250,000.
There is also a special rate for first-time buyers. The price at which they start paying stamp duty has gone up from £300,000 to £425,000.
The nil-rate threshold for First Time Buyers’ Relief is increased from £300,000 to £425,000 and the maximum amount that an individual can pay while remaining eligible for First Time Buyers’ Relief is increased to £625,000.
What is stamp duty?
Stamp duty land tax (SDLT) is a lump sum payment you have to make when purchasing London property for sale over a certain threshold in the UK.
How Would Stamp duty cut affect the UK housing market
The new changes will certainly have an impact on the majority of properties for sale across England and Northern Ireland. This will indeed help many first-time buyers who have agreed prices now, but we need to be careful that, as usually happens, house prices don’t simply rise further to eat up any potential savings and push homes out of reach for many more, especially at a time of higher interest rates.”
Tim Bannister, Rightmove’s housing expert, said: “Demand has been softening over the last few months but today’s announcement is likely to stimulate some more demand.
“If it does lead to a big jump in prospective buyers competing for the constrained number of properties for sale then it could lead to some unseasonal price rises over the next few months.”
“The first-time buyer threshold change means we could see more first-time buyers who can afford it making a jump to a bigger home in Canning town as their first move.
Is it a good time to buy a property?
This is a huge moment for the UK housing market. In the short-term, slashing buyers’ moving costs will help mitigate the pain of higher interest rates whilst benefiting from the new stamp duty tax cut.
While proponents of the tax cut claim it will improve social mobility by reducing an unnecessary barrier to people’s desire to move properties in Canary Wharf, others fear that it will simply further separate house prices from income levels.
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