‘Pushing house prices even higher’: Stamp duty cuts could increase property values by £34k

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Average house prices across the UK could increase by a further £34,000 over the next 12 months, according to market analysis by specialist property lending experts Octane Capital. The experts believe the price hike will be spurred by cuts to stamp duty land tax which could further inflate an already heated property market.

Last week, the Government announced it would be reforming stamp duty allowing home buyers to save thousands when buying a home.

Chancellor of the Exchequer, Kwasi Kwarteng, announced last week he will be doubling the level at which people begin paying stamp duty from £125,000 to £250,000.

They have also increased the level at which first-time buyers start paying stamp duty from £300,000 to £425,000.

The new thresholds will reduce stamp duty costs for all home buyers by up to £2,500, with first-time buyers able to access savings of up to £11,250.

Home buyers will not pay stamp duty on the first £250,000 when they buy a home, they will pay five percent on homes priced between £250,001 to £925,000, 10 percent on homes between £925,001 to £1.5million and 12 percent on homes over £1.5million.

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The latest stamp duty cut could lead to a similar level of house price growth. In fact, the experts estimate a further 10.8 percent increase over the next 12 months based on the market’s previous performance – equating to a jump of £33,610 in the average value of a home.

Certain areas could see a larger increase in prices than others with homebuyers in the South East potentially seeing the largest increase in the cost of buying over the next year.

The property experts estimated house prices could increase by £40,268 thanks to the latest stamp duty cut.

The South West and East of England could also see major annual spikes with increases of £37,768 and £35,631 respectively should the latest stamp duty cut result in a similar level of house price growth.

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The London market didn’t benefit as much from the original stamp duty holiday but a similar rate of growth following the latest cuts could still add £23,570 to the average cost of a home in the capital in the next 12 months.

The borough of Kensington and Chelsea is estimated to see the largest uplift in London with the average property value increasing by almost £109,000 in the next year.

Outside of London, homebuyers in Elmbridge (£72,734), St Albans (£63,076), South Oxfordshire (£60,173), South Hams (£57,067), Mole Valley (£55,192) and Winchester (£53,981) could see the cost of buying increase by the largest annual levels following the latest stamp duty cuts.

CEO of Octane Capital, Jonathan Samuels, said: “The property market landscape has become increasingly unstable in recent months, with increasing mortgage rates and the spiralling cost of living adding to the economic angst of the nation.

“But rather than steady the ship, the Government has once again chosen to rock the boat with ill-advised initiatives designed to fuel demand and push house prices ever higher.

“This will, of course, help bolster market activity in the short term, however, it will also push the dream of homeownership further out of reach for many, who simply can’t muster such a sizeable mortgage deposit.

“So while the current Government can pat themselves on the back at a job well done in keeping market sentiment afloat at present, the real worry is what’s to come further down the line and how their successors will deal with the mess they’ve left when the market does burst at the seams.”



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