LONDON (CU)_In July last year, the government of UK raised the level at which tax on property purchases to be paid from £125,000 to £500,000. The move was a part of the efforts to support buyers whose finances were affected by the pandemic, as well as to boost the property market that was grappling from the effects of lockdown. Although this meant that people buying homes would save up to £15,000, there is also downside to the buoyant market conditions, namely the significant rise in cost of mortgage deposits.
According to national estate agent Keller Williams, the cost of the average mortgage deposit, at a rate of 15 per cent of the property value, climbed by £11,000 in some areas of the country as a result of the stamp duty holiday. For instance, an average house price of £234,474 requires a mortgage deposit of £38,461, which is a 9 per cent jump of £3,249 from the average deposit of £25,212 prior to the launch of the tax holiday.
According to the national estate agent, in terms of regions, the South West has seen the largest monetary rise of £4,196 in the average cost of a deposit, while the South East also saw an increase of £4,000. The rise in the average cost in East England amounted to £3,498, closely followed by London at £3,180. However, in some of these regions, although the actual sum saw only a smaller increase, in terms of percentage, this amounted to a larger increase. In this respect, North East is the region which saw the biggest increase which rose by 13 per cent on account of the stamp duty holiday. A 12 per cent jump was seen in Yorkshire and the Humber, closely followed by North West, South West and Wales, with an increase of 11 per cent.
“The stamp duty holiday is now effectively over for all but those in the final stages of a transaction due to the long market delays that have accumulated at the back end of the process,” Ben Taylor, Chief Executive of Keller Williams UK, said. “Much like a night out when you have work the next day, it certainly seemed like a good idea at the time, but current homebuyers will be wondering if it was really worth it given that they now face a considerably larger financial hurdle to homeownership.”
