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Stamp duty holiday end: where London first-time buyers can still avoid property tax

·3 min read
£300,000: this three-bedroom Grade II-listed cottage in Maidstone, Kent  (Rightmove)
£300,000: this three-bedroom Grade II-listed cottage in Maidstone, Kent (Rightmove)

The stamp duty holiday comes to an end at the end of this month, and first time buyers are going to need to revise their buying budgets accordingly.

The good news is that novice buyers still get a tax amnesty on properties costing up to £300,000, while other buyers will have to start paying the tax above £125,000.

The bad news is that in London the average first-time buyer spend is £486,000. A home sold for this price would attract a stamp duty bill of £9,300 — based on zero tax charged on the first £300,000 and five per cent tax charged on the remaining £186,000.

Buyers who still want a tax free home in the capital will find their choices limited.

Of the 43,693 properties currently listed on Rightmove, just 3,522 are on offer for £300,000 or less, and many of those are shared ownership or retirement properties.

£300,000: a two-bedroom flat in Fairbairn Hall, Canning Town (Rightmove)
£300,000: a two-bedroom flat in Fairbairn Hall, Canning Town (Rightmove)

Other options include a two-bedroom flat in Fairbairn Hall, a Grade II listed former boys’ club in Canning Town, on sale with Reed Rains for £300,000.

In Wanstead you could opt for a one-bedroom flat in a neo-Gothic church conversion, being sold by Petty Son & Prestwich for £300,000.

Or, for £75,000 you could buy a 50ft narrowboat moored at Wenlock Basin, Islington, on sale with Boatshed London. While the buying price is appealing it is important to note that mooring fees at Wenlock are around £8,800 per year.

£75,000: a narrowboat moored in Wenlock Basin, Islington (Rightmove)
£75,000: a narrowboat moored in Wenlock Basin, Islington (Rightmove)

What can you buy for under £300,000 outside London?

Beyond London you will get a lot more bang for your £300,000.

£300,000: a two-bedroom cottage in Chinnor, Oxfordshire (Rightmove)
£300,000: a two-bedroom cottage in Chinnor, Oxfordshire (Rightmove)

In Chinnor, South Oxfordshire, you could pick up a two-bedroom cottage close to the Chiltern Hills, on sale with Bonners & Babingtons, for £300,000.

In Maidstone, Kent, the same budget would buy a three-bedroom home close to the town centre, on sale with Wards.

Or, if you have fully embraced WFH you could head to Loth, on the north east coast of Scotland, where McEwan Fraser Legal has three terraced cottages overlooking the sea, with their own mill pond and outbuildings, on sale for offers over £299,000 – although serious renovation is required.

£299,000: cottages in need of renovation in Loth, Scotland (Rightmove)
£299,000: cottages in need of renovation in Loth, Scotland (Rightmove)

What will happen to London property after the stamp duty holiday?

In Leytonstone, which has emerged as a real first-time buyer hotspot, Nas Khaliq, sales director of Cameron Adams estate agents, said that activity had been slowing for the past three to four weeks in advance of the end of the stamp duty holiday.

“Put it this way, the last house I sold was three weeks ago,” he said. “We are not getting many new buyer enquiries.”

However, Khaliq believes a cooling market could be good news for first-time buyers. “A lot of them have been really priced out of the market over the past year, but I think that as things slow down towards the end of the year they will start to come back,” he said.

Estate agent Hamptons has a similar thesis. It forecasts that while 2021 will go down in the record books for the volume of homes sold on the back of the tax holiday the surge will come to a grinding halt now there are no savings to be made.

On this basis it predicts London will continue to trail the rest of the UK with annual price rises of below inflationary 1.5 per cent this year and one per cent next year.

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