First time buyers pay 31% more due to Stamp Duty Holiday

The Stamp Duty Land Tax (Temporary Relief) Act was introduced by the government in July 2020 to combat the weight of the COVID 19 Pandemic on the housing market. Now, a year later, and nearly 4 months after Stamp Duty began its slow return to normal rates, our data shows that first time buyers are paying up to 31.5% more for properties across England.

What is the Stamp Duty Holiday (Stamp Duty Land Tax Temporary Relief Act)?

To prevent COVID 19 Pandemic from devastating the housing market, the government intervened with the Stamp Duty Land Tax (Temporary Relief) Act. The Act, also known as the Stamp Duty Holiday, suspended and altered some of the existing rates for SDLT to incite interest in the housing market and galvanise the economy.

From 8th July 2020 to 30th June 2021, home buyers could pay highly reduced Stamp Duty rates, including zero tax on properties priced under £500,000.

• Up to £500,000: Zero SDLT
• £500,001 to £925,000: 5%
• £925,001 to £1.5 million: 10%
• Above £1.5 million: 12%

How does the Stamp Duty Holiday affect house prices?

As Stamp Duty is a tax on home buyers - the lower the rates, the more money buyers have in their pockets. The holiday, coupled with the severe shortage of homes on the housing market, and a general lack of funds among average-wage home buyers, has made the demand for property skyrocket. With home sellers quick to take advantage of this situation, there’s been a big increase in property prices across the country.

If you’re interested in how house prices are looking in your area, check out our free House Prices tool. It provides up-to-date information on average house prices as well as their average selling time.

The average first time home buyer is paying 11.7% more

In July 2020 just before the SDLT holiday was introduced, the average price of a first-time buyer home was £212,166. However, our latest figures show the average first-time buyer home now costs £236,982, an increase of £24,816 or 11.7%.

Biggest increases by region

The North West has seen the largest first-time buyer price increase by region, with the average first-time buyer now paying £168,820. That’s a 16.9% jump since July last year.

Elsewhere in the north, Yorkshire and Humber have seen a rise of 14.8% and the North East has seen a rise of 13.4%. In the Midlands region, the West Midlands has seen a rise of 13% and the East Midlands a rise of 12.9%

• East Midlands: 12.92%
• East of England: 11.29%
• London: 5.28%
• North East: 13.41%
• North West: 16.90%
• South East: 8.94%
• South West: 11.28%
• West Midlands: 13.08%
• Yorkshire and The Humber: 14.77%
• England: 11.70%

Biggest increases by local authority level

Richmondshire, North Yorkshire, has seen the largest increase in average price for a first-time buyer. Originally £178,974 in June 2020, today the average price has risen to £235,425, an increase of £56,451 or 31.5%

In Rossendale, Lancashire, the average first-time buyer property now costs £147,417, having risen 24.3% since the introduction of the SDLT holiday.

• Richmondshire: 31.54%
• Rossendale: 24.25%
• North Norfolk: 23.09%
• North Devon: 18.95%
• Cotswold: 18.06%
• Hastings: 17.94%
• Shropshire: 17.73%
• West Devon: 17.71%
• Derbyshire Dales: 17.62%
• Salford: 17.18%

Are there any exceptions?

Not everywhere in England has seen a big increase in property price. In some of the more affluent areas of London, the average property price for first time buyers has dropped significantly.

In Kensington & Chelsea for example, the first time buyer’s home cost £1.1 million in July 2020. Now however, the price has dropped to just over £1 million, a decrease of - 6.5%.

Other decreases include:

• Hackney: - 4.1%
• City of London: - 4%
• City of Westminster: -3%
• Southwark -1.4%

What the Stamp Duty Holiday means for first time home buyers

While the Stamp Duty Holiday has been a huge success in injecting life into a threatened housing market, it’s undeniable that first time buyers have been marginalised. While many existing homeowners have benefited from a boost to the value of their property, most first-time buyers are worse off when it comes to taking that first step onto the property ladder.

What is Stamp Duty?

Stamp Duty Land Tax or SDLT is a government tax on property and land transactions. The amount of tax you pay is proportionate to the amount of money you spend on property or land.