Since the housing boom that occurred in 2007/08 the housing market hit record highs with homebuyers paying a total of £7.5bn in stamp duty in 2014/15, £800m more than the previous record in 2007/08, according to Halifax research.
The change in the stamp duty tax was announced in 2014, altering to a progressive banded system where buyers only pay a higher rate proportionate to the price of the property. No tax is paid on the first £125,000 of the value of the property, then 2% is paid on the value above £125,001 to £250,000. For example, with a home costing £175,000 you would pay £1,000 (2% of the property value that falls within the relevant band e.g. 2% of £50,000). See here for full stamp duty rates.
The stamp duty increase benefits the First-Time/average homebuyer the most. Those spending less than £938,000 on a property benefit from a reduced bill of more than half. Under the old system, buyers spending £273,531 on a property would pay £8,205, where now under the progressive tax system they would only pay £3,676. According to Halifax research, since the system was altered a year ago, the average homebuyers pay £4,500 less in stamp duty.
With the new official stamp duty government writing due to be announced tomorrow, the full impact will undoubtedly create a short term effect on the housing market in the lead up to the April 2016 implementation date. Read our here about what the new buy-to-let stamp duty means and how it might affect you.