Latimer Hinks Solicitors is warning first time buyers that they will need to re-evaluate their finances in the wake of the residential Stamp Duty Land Tax (SDLT) threshold reverting to its previous rate
In a bid to boost the housing market, the Government increased the Stamp Duty Land Tax exemption level to 175,000.
This was in an attempt to benefit those in the lower value end of the market, which predominantly covers first time buyers.
But it is to drop back to 125,000 at the end of the year, which means that many people will have to factor hundreds of pounds more into their home buying calculations.
Residential property buyers will have to fork out one percent of a propertys cost in Stamp Duty Land Tax if its value is more than 125,000.
Nicola Neilson, a Partner at Latimer Hinks, said: A lot of recent attention has focused on the squeeze in accessing mortgages with buyers having to save a much larger deposit.
So a lot of people may not be aware that the Stamp Duty Land Tax holiday, introduced by the Government, is due to run out at the end of 2009.
People either need to move quickly to complete the purchase of a home under the 175,000 price bracket or, if this is not feasible before the end of the year, they will have to recalculate what they will need to spend.
As from the New Year, the Stamp Duty Land Tax on a 175,000 home will be 1,750, which is a substantial amount to have to find, particularly bearing in mind that, in the current climate, mortgage companies are often seeking deposits of 20 per cent or more.
In some areas, which the Government has designated as disadvantaged, the Stamp Duty Land Tax exemption threshold will drop to 150,000 rather than 125,000.