The nil-rate stamp duty band is doubled from £125,000 to £250,000 in England and Northern Ireland. This means an average extra 200,000 buyers will pay no stamp duty at all. Of those, 60,000 will be first-time buyers. The move means the stamp duty bill on a £312,000 home in England will fall from £5,600 to £3,100.
Jeremy Leaf, estate agent and former chairman of the Royal Institution of Chartered Surveyors, said: “The Chancellor clearly recognises the dangers in terms of reduced revenue from stamp duty, given the recent reduction in housing market activity, and has taken steps to boost the market.
“The stamp duty cut, particularly for first-time buyers, should encourage those at the first rung of the housing ladder to take the plunge, which will be good not just for the market but for job and social mobility across the board, as well as the wider economy.
“It’s also good news that it is an immediate and permanent reduction which means existing transactions shouldn’t be unduly delayed and benefits can be felt as soon as possible.”
Mr Kwarteng’s announcement is a victory for The Daily Express, which has led the way campaigning against the hated levy – a tax on already taxed income just because of a change of address.
Mark Harris, chief executive of mortgage broker SPF Private Clients, says: “Every homebuyer will benefit from the doubling in the nil-rate band from £125,000 to £250,000, saving £2,500.
“With mortgage rates continuing to rise, this reduction in stamp duty will be more important than ever. The fact it is permanent is also welcome as it won’t lead to spikes in activity as people rush to take advantage.”
A third of all homes for sale in England are now exempt from stamp duty, according to property website Rightmove.
Two thirds are exempt from the duty for first-time buyers who were given an extra boost up the property ladder with the threshold at which they have to pay the tax bill increased to £425,000 from £300,000.
The changes come into effect immediately, meaning buyers who are completing purchases today should benefit.
Tomer Aboody, director of property lender MT Finance, said: “This stamp duty relief will bring the buzz back to the housing market by helping first-time buyers get on the ladder, allowing them to offset higher cost of mortgages with the stamp duty saving.”
The changes to the first-time buyer rates will provide a boost for first-time buyers in the South East, where high house prices mean even entry-level purchasers face significant tax bills. The average first-time buyer purchasing a home in the capital for £456,307 will save £6,250 in stamp duty under the new threshold, with their tax bill dropping from £7,815 to £1,565.
Savills said that for the average home mover who is not a first-time buyer, the change will reduce the stamp duty bill from £7,209 to £4,709 – a saving of £2,500.