Buying a home has always been expensive, but despite recent reforms, it seems as though stamp duty is still taking a heavy toll on homebuyers' wallets. Indeed, according to a report by Lloyds Bank, homebuyers in England & Wales spent around £7.7 billion on stamp duty tax in the year to March 2015, £1.5 billion more than in the preceding year.
This hefty sum dwarfs the total of £6.2 billion in the year to March 2008, when the housing boom was at its height, indicating that the costs of this tax have become an increasingly heavy burden.
This increase is thought to be the result of growth in the number of residential housing transactions and rising house prices, which has led to more and more people paying higher rates of stamp duty tax. Indeed, the average homeowner now spends £9,600 in the course of their home-buying years as they move up the housing ladder.
The report also found that more and more first-time buyers are finding themselves forking out for stamp duty when taking their first step on the housing ladder. In the year to March 2015, 66% of first-time buyers paid stamp duty, over double the number who did the same in 1999 (32%). A similar picture can be seen among homemovers: in 1999, only 68% of homebuyers were liable for stamp duty tax, but this has now risen to 85%.
Those living in southern regions have felt the pinch particularly harshly, with nine out of 10 first-time buyers and homemovers paying stamp duty. Londoners and buyers residing in the South East have seen their costs spiral, with Londoners paying four times as much as the average for the rest of England & Wales (£38,600) while buyers in the South East fork out around £22,800 in their lifetime.
These results may reveal eye-watering sums paid out by homebuyers eager to move into their dream home, but there is some relief at hand.
Reforms to how stamp duty is applied came into force in December 2014, and mean that the majority of homebuyers should now end up paying less stamp duty than before. Indeed, the typical stamp duty bill for third-time buyers has already fallen by £2,500 (26%) thanks to the changes.
Despite the recent improvements, if house prices continue to rise, so will the cost of the stamp duty bill. If you've been eyeing up the housing market and think the time is ripe for you to buy, then it's time for you to find the right deals to keep your costs to a minimum. Average mortgage rates have hit a fresh low, so now is the perfect time to take advantage and secure yourself a low fixed rate. By keeping your repayments as low as possible, you can keep the cost of buying your new home down, which may help to offset some of the sum you pay out for stamp duty.
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