Martin Lewis has called the Government out on a claim that a typical first time buyer will save more than £11,000 with new stamp duty cuts.
The changes to stamp duty formed part of Chancellor Kwasi Kwarteng ’s mini-budget last month. Under the old rules, no stamp duty was paid on the first £125,000 of a property purchase, or the first £300,000 for first-time buyers if the property cost less than £500,000.
The mini-budget saw the £125k threshold double to £250k, while the first-time buyer threshold rose to £425k and now applies to any property up to £625k. But as the Government posted a message on social media saying how much money first-time buyers would save with these new figures, Martin blasted the claims as “nonsense”.
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A post on the official HM Treasury Twitter account read: “Thanks to the Growth Plan, a typical first time buyer in London moving into a representative terraced house will save £11,250 on stamp duty & £1,050 on the household's energy bills - and if they earn £30,000 almost an additional £400 on tax. This is around £12,700 in total.”
But Martin was quick to debunk the figures, quoting the original Tweet as he replied: “This is nonsense. To make that stamp duty saving you'd need to be buying a £500,000+ property.
“With 10% deposit, cheapest fix mortgage would cost £2,400/mth (£28,000/yr). How can someone on £30k afford that?”
“I am asking Treasury to remove,” he added. The message comes after the financial expert warned that rising interest rates following the mini-budget announcements would be “catastrophic” for many in the UK amid the cost of living crisis.
During an appearance on This Morning last week , Martin struggled to advise a homeowner who asked what she could do as she was worried about being able to afford her mortgage repayments. “I don’t know,” Martin admitted after a long pause, shrugging his shoulders.
“I mean, I just… the situation now is bad,” he went on. “And if those interest rates go up as it's been discussed - and it is not certain that they will, but that is what the markets are predicting - then we are going to have millions of people in that [situation] and we are sitting on a mortgage ticking timebomb.”
Martin explained in his latest MoneySavingExpert newsletter how the interest rate hike could affect monthly mortgage repayments. He wrote: “For each 1 percentage point your mortgage rate increases, expect to pay roughly £50 more a month (£600/year) per £100,000 of mortgage debt.”
The MSE founder went on to warn that rising rates “will likely push millions renewing when their fixes end into 'can't pay my mortgage' territory”. Martin urged anyone whose fix ends before March 2023 to check new mortgage deals now, “as rates are likely to rise further, and today's rates may soon disappear”.
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