At the end of 2014, stamp duty land tax was reformed in order to make it fairer for those looking to buy a home. At the time, it was estimated that around 98% of purchases would end up paying less stamp duty, and it certainly seems that many have been able to pocket savings. However, despite the smaller costs associated with this tax, it doesn't appear to have fuelled home moving.
Research by Lloyds Bank has found that the stamp duty changes have allowed buyers to save an average of £4,530, a fair-sized sum that can then be put towards the other expenses associated with buying a home. The largest savings were pocketed by those in East Anglia, where someone buying at the average price of £255,028 paid just £2,751 in stamp duty fees, compared with a much larger sum of £7,650 before the changes were implemented.
Buyers living in London, the South West and the South East have also been able to save significant sums of money thanks to the tax changes: Londoners have saved an average of £4,850, while those living in the South West and the South East have saved themselves £4,654 and £2,767 respectively.
These changes have undoubtedly been positive for savers' wallets, making the cost of buying a home a little less burdensome. Borrowers have also been able to benefit from other market changes that have boosted their finances even further – wage growth grew in 2015 while mortgage rates fell, creating a perfect storm for those who wanted to get on or move up the slippery pole of homeownership.
It would be fair to suppose, then, the number of people moving home would have increased – but this seems not to be the case. Indeed, Lloyds Bank found that the number of people who moved in 2015 stood at 365,000, a little below the number who did the same in 2014 (366,400). The number of homemovers also fell well below the peak recorded in 2006; 712,000 people moved in this booming year, casting the number of homemovers in 2015 firmly into the shade.
"2015 brought good news to homemovers," commented Andrew Mason of Lloyds Bank, "so we might have expected the change to the stamp duty structure to have resulted in greater numbers". However, as he goes on to point out, the firm upward trajectory of house prices has somewhat curbed enthusiasm.
For instance, over the past five years the average price paid by homemovers has grown by a staggering 30% - in 2010, the average house price stood at £210,252, but this had risen to an eye-watering £273,491 in 2015, an increase of £63,239. This rise in prices has also meant that borrowers have had to lay down larger deposits in order to secure their dream home. Over the same period, the average deposit size has grown by 22% to £91,020, up from £74,649 back in 2010. As a result, it is hardly surprising that the number of homemovers has not rapidly increased, for the savings made in stamp duty are easily eclipsed by the increase in house prices.
This may all sound like doom and gloom, but there's no reason why you can't move to your ideal home. As mentioned earlier, the market is still offering up some gifts to borrowers in the form of low mortgage rates, and with a rise in base rate being pushed back even further, these all-time low rates are likely to stick around for a little longer.
You can give yourself a boost by making sure you save as much as you can in an account that works hard for you – try to maximise your tax-free ISA savings and maybe think about a regular savings account, which will allow you to make regular contributions to amass a decent-sized pot. Once your deposit is sorted, it's time to hunt for the most cost-effective mortgage deal for you. Check out our mortgage best buys to find the best deals, and who knows? Perhaps you will soon be part of the homemover statistics for 2016.
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