The Chancellor Alistair Darling has announced budget changes removing stamp duty on home purchases up to a value of £250,000. This applies to first time buyers only, but should drive sales of first time buyer mortgages. Stamp duty of 1% currently applies to all homes over £125,000 in value.
The move will be funded by an increase of stamp duty from 4% to 5% on houses valued at over £1 million.
The move is likely to re-energise the first time buyers market, in the same way as the recent stamp duty ‘holiday’ in 2009.
The stamp duty holiday that applied in the closing months of 2009, when the stamp duty threshold was held at £175,000, produced a rush of first time buyers eager to complete their purchase before Christmas. Stamp duty then reverted to the lower level of £125,00o on 1st January 2010.
The effects of that higher stamp duty threshold became evident when the Council of Mortgage Lenders (CML) announced high mortgage sales of £13.4bn for December. In January, once the stamp duty advantage had ended, mortgage sales fell back 32% to £9.1bn.
[...] Stamp duty budget change will drive first time buyer mortgage market [...]