A MAP has revealed the worst areas for first time buyers with hundreds more homes set to be hit by a stamp duty hike within weeks.
Currently, first-time buyers do not have to pay stamp duty on the first £450,000 of a property purchase.
First-time buyers will see their purchase prices shoot up[/caption]
But from April the threshold beyond which they must pay the tax will plummet to £300,000.
It could add thousands of pounds to the total cost of buying a home.
Zoopla research shows that, currently, 21 per cent of first-time buyer sales pay stamp duty.
However, the new data has revealed that the proportion of first-time buyers liable to pay stamp duty will double to 42 per cent from April.
And those buying in London, the South East and Eastern England have been hit the hardest.
Eastern England will see the largest uplift, at 34 per cent, along with the South East while London will experience a 30 per cent uplift.
On the other end of the scale, the North East is only expected to rise by around 1 per cent, while Yorkshire and the Humber and Northern Ireland are expected to see a 3 per cent uplift.
The report added that 58 per cent of first-time buyer sales will be stamp duty-free, as they only have to pay stamp duty on purchases over £300,000, which would help “those buying in areas with lower house prices”.
Zoopla estimates this will generate an additional £200m in stamp duty.
Buying at £350,000 will cost £2,500 per purchase, up from nothing today.
And buying a £500,000 home will cost £10,000 in stamp duty, up from £3,750 currently.
If you are looking to purchase a property at £550,000 it will mean a jump from £6,250 to £15,000.
However, 58 per cent of first-time buyer purchases will still pay no stamp duty under property purchases of £300,000 with buyers in the north benefitting the most.
Overall these changes are estimated to raise an extra £1.1bn a year in stamp duty for the government.
Meanwhile, the biggest jump in home buyers paying stamp duty will be in the West Midlands where 66 per cent more sales will pay stamp duty from April.
Richard Donnell, Executive Director at Zoopla said: “Stamp duty has become a big source of tax revenue, approaching £10bn a year for the government. The reduction in tax reliefs from April will see more home buyers paying stamp duty.
“Existing homeowners will pay up to £2,500 more for each purchase across a large number of sales.
“The average seller has made £60,000 in capital gains so there is flexibility to absorb this cost but buyers will expect to factor this extra cost into what they offer.
“It’s positive that most first-time buyers will still pay no stamp duty from April, but these changes hit those buying over £300,000 in southern England the most where buying costs are already high. This will reduce buying power and market activity at a local level.
“Stamp duty is a big tax on home movers in southern England where affordability problems are already a major challenge.
“The case for reforming stamp duty remains but the question is where to replace the multi billion in annual tax revenues.”
(AD) Find out how much cash you could release from your home
Advice is required before proceeding with equity release.
Buyers who want to complete their purchase before the deadline need to act fast as time is running out.
It takes an average of 126 days between a sale being agreed and completion.
Some homeowners have already sprung into action.
The proportion of homes which were bought by first-time buyers across Great Britain hit a record high in the last two months of the year.
First-time buyers purchased 31.8 per cent of homes in the country in November and December, the highest figure on record.
Yorkshire and the Humber saw the biggest rise in the proportion of homes bought by a first-time buyer.
Over the course of last year around 28 per cent of homes were purchased by a first-time homeowner.
But this number soared to 32 per cent in November and December.
Meanwhile, in London nearly half of homes sold in the last two months of the year were purchased by first-time buyers – the highest share in the country.
Around 69 per cent of these buyers bought a home which cost more than £300,000.
This means they are set to save money if they can complete their purchase by the deadline.
A typical home in the UK cost £268,518, according to Nationwide Building Society.
But an average home in London would set you back £525,535 – nearly double the national average.
Meanwhile, a similar property in the South East would set you back £336,224 – £67,706 more than the national average.
What help is out there for first-time buyers?
GETTING on the property ladder can feel like a daunting task but there are schemes out there to help first-time buyers have their own home.
Help to Buy Isa – It’s a tax-free savings account where for every £200 you save, the Government will add an extra £50. But there’s a maximum limit of £3,000 which is paid to your solicitor when you move. These accounts have now closed to new applicants but those who already hold one have until November 2029 to use it.
Help to Buy equity loan – The Government will lend you up to 20% of the home’s value – or 40% in London – after you’ve put down a 5% deposit. The loan is on top of a normal mortgage but it can only be used to buy a new build property.
Lifetime Isa – This is another Government scheme that gives anyone aged 18 to 39 the chance to save tax-free and get a bonus of up to £32,000 towards their first home. You can save up to £4,000 a year and the Government will add 25% on top.
Shared ownership – Co-owning with a housing association means you can buy a part of the property and pay rent on the remaining amount. You can buy anything from 25% to 75% of the property but you’re restricted to specific ones.
Mortgage guarantee scheme – The scheme opens to new 95% mortgages from April 19 2021. Applicants can buy their first home with a 5% deposit, it’s eligible for homes up to £600,000.
