South East Buyers saving £3870 plus under new stamp duty rules

New data released from Mortgage Advice Bureau suggests that buyers are taking advantage of the stamp duty reform.

The changes, which were announced in December’s Autumn Statement, appear to be fuelling a rise in mortgage applications while keeping borrowing in check.

The data also reveals the Chancellor's new rules has helped some buyers by releasing extra funds for a deposit: allowing them to take on a greater share of the cost of buying a home.

Average deposits in December were worth 30.7% of the purchase price, the highest since October 2013 when the average was recorded at 30.9%.

Brian Murphy, head of lending at Mortgage Advice Bureau, comments: "December's stamp duty announcement was an early Christmas present for many aspiring buyers. Having extra funds to put towards a deposit can not only help to limit borrowing commitments and give people more bargaining power. It can also allow access to better mortgage deals at lower LTVs, either at the point of purchase or when it comes to remortgaging at a later date.

We are yet to see the extent that stamp duty savings are mirrored in higher asking prices, but after a period where credit conditions were squeezed by the new mortgage rules, this fairer tax regime has certainly fuelled buyer optimism about their purchase prospects for 2015."

Regional Breakdown

In London, the average homebuyer stood to make the biggest saving, with typical buyers in the region pocketing an extra £4,593.10 under the new system. However, due to the high property prices in the capital, this actually means the saving is just 2% of the average deposit.

The South East is also doing well with typical buyers in the region saving £3,870.50 in stamp duty or 4% of their deposit.

Buyers in the North West are saving an average £1,059, or 3% of a deposit.

On average, the savings across regions last month was equivalent to £1,376.11, or £1,054.41 if you exclude the capital. Aside from the West Midlands and Wales, the savings stood at more than £500 under the new system.

However, with an average house price of £248k, buyers in Scotland are saving just £12.19.

Brian Murphy, said: “The mortgage market has come through a potentially turbulent year intact with good growth prospects for 2015. However, the shift in lending criteria has had a noticeable effect on the shape of the market, particularly at the margins where affordability is most stretched.

The changes mean the market can grow on a surer footing, and we now have a more sensible approach to stamp duty in place. However, there are still regional pressures and we mustn’t forget the vital support needed by less affluent buyers. Many can still reasonably afford to support a loan even if they have a smaller deposit, so it is encouraging to see a steady stream of new products appearing since the turn of the year.

It’s likely that we’ll see a further adjustment in 2015 as lenders get more comfortable operating under the MMR and continue offering prudent loans to a broad range of consumers.”