What has changed?
First-time buyers received a Budget bonus: stamp duty has been scrapped on homes valued at up to £250,000. It was previously levied at 1 per cent on properties worth between £125,000 and £250,000. However, the exemption will apply only for the next two years. The Chancellor said the cost of this initiative would be funded by a new 5 per cent stamp-duty tier on homes worth £1m or more from 6 April 2011.
How much does stamp duty cost?
The standard stamp duty bands are: 1 per cent on homes worth between £125,000 and £249,999; 3 per cent between £250,000 and £499,999; 4 per cent between £500,000 and £999,999; 5 per cent £1m-plus (from April 2011)
Is the exemption up to £250,000 available to all?
No, only first-time buyers will benefit. Other buyers will still be required to stump up a stamp duty fee for properties worth more than £125,000.
What will this mean for first-time buyers?
With many first-timers struggling to scrape together a deposit, this will come as a welcome boost. Analysts estimate that nine out of 10 first home owners will now avoid having to pay stamp duty. However, in areas where property prices are high, such as London and the South-east of England, even those taking their first steps on to the property ladder could still face a stamp duty bill.
What effect will it have on the housing market?
Although the stamp duty exemption applies only to first-time buyers, many experts believe it will have a positive impact on the whole property market. One factor contributing to the weakness of the market is the absence of first-time buyers, which is causing stagnation in some areas. If the stamp duty change means more people will look to get on to the property ladder, it should help those further up who are trying to move.