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Budget 2017: What does the stamp duty change mean? Budget 2017: What does the stamp duty change mean?
(35 minutes later)
Stamp duty will be abolished immediately for first-time buyers purchasing a home of up to £300,000, Chancellor Philip Hammond has said. Stamp duty will be abolished immediately for first-time buyers buying a home of up to £300,000, Chancellor Philip Hammond has said.
In London and other high price areas, first-time buyers will be able to buy a house worth up to £500,000 and pay no stamp duty on the first £300,000. For properties costing up to £500,000, no stamp duty will be paid on the first £300,000.
This means that 80% of first-time buyers will pay no stamp duty, he said. Mr Hammond said this meant 95% of first-time buyers would see stamp duty cut, while 80% would pay none at all.
The change will apply in England and Northern Ireland, and in Wales up until the end of March, but not in Scotland.The change will apply in England and Northern Ireland, and in Wales up until the end of March, but not in Scotland.
The maximum saving, according to the Treasury, will be £5,000.
"This is our plan to deliver on the pledge we have made to the next generation that the dream of home ownership will become a reality in this country once again," Mr Hammond said."This is our plan to deliver on the pledge we have made to the next generation that the dream of home ownership will become a reality in this country once again," Mr Hammond said.
Regional differences
Estate agent Savills estimates that the average stamp duty bill for first-time buyers is about £2,700.Estate agent Savills estimates that the average stamp duty bill for first-time buyers is about £2,700.
For most first-time buyers, the deposit is the biggest up-front cost. The average deposit outside London is £24,000 and in London it is £72,000. But in many parts of the country, first-time buyers will see no - or very little - saving at all.
Helping more people to buy their first home is part of a Conservative push to win back younger voters, many of whom opted for Labour at the last election. In the North of England, the average Stamp Duty charge is currently £11.82, according to analysts at AJ Bell.
Home ownership has fallen in recent years, with 62.9% of the estimated 22.8m households in England being owner-occupiers in 2015-16, the Department for Communities and Local Government found. That is down from 70.9% in 2003. This is because average house prices are only just above the English Stamp Duty threshold, at £125,000.
Just 20% of those aged 25 own a property, compared with 46% two decades ago, according to the Local Government Association. Almost half of those aged 24 to 34 in England pay rent to a private landlord. However, buyers in London who spend £500,000 could theoretically save £5,000.
"The stamp duty relief for first time buyers announced in today's budget will be a welcome boost to people purchasing their first home but the impact will be felt disproportionately in the south of England," said Tom Selby, senior analyst at AJ Bell.
Market boost
For all first-time buyers, the deposit is a bigger up-front cost than Stamp Duty. The average deposit across the UK is £32,899, according to the Halifax, compared to the average Stamp Duty charge of £1,654.
Tom Kibasi of the centre-left think tank the Institute of Public Policy Research (IPPR) said: "Unaffordable house prices are the problem, not Stamp Duty. For most young people, the stamp duty cut will make little difference.
"But it will help the beneficiaries of the bank of mum and dad."
The change could stimulate the lower end of the housing market.
The Office for Budget Responsibility (OBR) said the Stamp Duty change would add 0.3% to house prices.