Is now a good time to buy your first home? Well, it could be perfect timing if you want to save money on stamp duty.
The government normally demands stamp duty of 1% on homes worth between £125,000 and £250,000. But in March 2010, it granted an exemption to first-time buyers who were struggling to get a foot on the housing ladder. Anyone buying their first home could therefore potentially save up to £2500 in tax.
But the stamp-duty holiday comes to an end on 24 March, so there’s not much time left.
Of course, it is not a good idea to rush into a house purchase. But the tax savings are appealing. The average first property costs £131,000, according to the Council of Mortgage Lenders. So the typical saving is £1300.
Hundreds of thousands of buyers have already taken advantage of the tax break – and you can understand why. The cost of moving house has jumped by 70% in the last 10 years and now stands at £9,000, according to a report by Lloyds TSB that looked at stamp duty, mortgage arrangement fees, estate agency fees, legal and removal costs.
The commission paid to estate agents accounts for the biggest chunk of the cost at 38% or £3400. But stamp duty is a close second at 21% or £1876.
If you are unlikely to benefit from the stamp duty concession, remember there is no tax to pay on property purchases of less than £125,000. It is therefore worth negotiating hard over the purchase price of the property.
Naomi Caine was editor of The Sunday Times Money section for six years before she moved out of London to bring up a young family. She now juggles two children with a freelance career, and has written for a variety of publications, including MSN, Yahoo, The Times, The Sunday Times, Which? Money, Money Week and The Sunday Herald.