The Chancellor has announced that stamp duty is to be abolished for all first time buyers on properties bought up to £300,000, effective from today. In addition, first time buyers purchasing properties up to £500,000 will pay no stamp duty on the first £300,000.
In his Budget, Philip Hammond announced that 80% of first time buyers would pay no stamp duty at all. With 358,000 first time buyers in the last year, this means that at least 24% of all sales in the UK’s housing market are set to be charged 0% tax. Once other exempt sales under £125,000 are taken into account, this figure will be even higher.
Two thirds of properties bought so far this year across the country have been under the new threshold but there are large regional variations. In Wales and the North East, over 90% of sales in the last year have been over £300,000 while just 17% of sales in London were for less than £300,000.
While good news for first-time buyers, this will further squeeze investors in the sub-£500,000 market who are already suffering from increased taxes. What's more, it does not, give any encouragement to owners higher up the chain to downsize.
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UK HOUSE PRICE INDEX: APRIL 2016 (released 14 June 2016)
[The new UK House Price Index comprises figures collated by the Office for National Statistics from data supplied by Land Registry, Register of Scotland, Land and Property Services, Northern Ireland and the Valuation Office Agency. In addition, there are separate detailed reports for England, Wales and Scotland. New statistics are included relating to the status of the building (new build or existing resold), the buyer (first time or repurchase) and the funding (cash or mortgage). The following summary looks at some aspects of the overall report for the UK and the detailed report for England]
The new April 2016 house price index data for the UK showed a monthly rise of 0.6 per cent in average house prices across England, Wales, Scotland and Northern Ireland, bringing the average house price to £209,054. In England the rise was slightly higher at 0.7 per cent and the average house price £224,731, while in London the monthly change was 0.6 per cent and the average house price £470,025.
However, most regions showed a higher monthly rise than London, including the North West at 2.3 per cent, the West Midlands at 2.2 per cent, the East Midlands and Yorkshire & The Humber both at 1.6 per cent, and the East of England at 1.2 per cent. The South East trailed behind London at 0.3 per cent while falls were seen in the North East at minus 0.9 per cent and the South West at minus 2.8 per cent.
On an annual basis the price change across the UK was 8.2 per cent and in England 9.1 per cent. London saw the highest annual change at 14.5 per cent, followed by the East of England at 13.6 per cent and the South East at 12.3 per cent. The lowest rise was seen in the North East at only 0.1 per cent. Detailed statistics for each local authority area show a wide spectrum of annual changes from minus 4 per cent in Hartlepool to increases of more than 20 per cent in Slough, Thurrock some London boroughs.
By property type, terraced properties saw the greatest annual increase of 9.0 per cent, followed by semi-detached properties at 8.8 per cent, while in terms of sales volumes the annual change from February 2015 to February 2016 was 1.1 per cent.
New figures are also reported for funding status, which compares average cash and mortgage prices. In England, the average cash price was £210,602 while the average mortgage price was £231,866. For cash purchases, the monthly change was 0.1 per cent and the annual change 8.1 per cent, while for mortgage purchases the monthly change was 1 per cent and the annual change 9.6 per cent.
New statistics relating to property status showed that the average price of a new build property in England was £275,487, up 4.9 per cent on the preceding month and up 11.2 per cent on a year ago. This contrasts with resold property, which has an average price of £221,315, only 0.4 per cent higher than a month earlier, and 9 per cent higher than a year ago.
New statistics on buyer status in England showed that the average price of a house sold to a first time buyer was £189,179 with a monthly change of 0.9 per cent and an annual change of 9.3 per cent. However, the average price of a house sold to a former owner occupier was £254,409, showing a monthly change of 0.5 per cent and an annual change of 9 per cent.
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