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One third of first-time buyers escaped paying stamp duty in September as a result of the break on the tax on properties under £175,000 – act now to cash in yourself before the tax break ends.

In September 2008, the Government decreed that there would be a temporary break on stamp duty for any property under £175,000 until the end of 2009. According to new data released by the Council of Mortgage Lenders, a third of all first-time buyers benefitted from this in September – and if you want to take advantage of the break you'll have to act fast.

The CML says an estimated 132,500 house purchases under £175,000 have escaped paying stamp duty which otherwise would have incurred the tax at 1%. But by January the tax will be reset and all home purchases over £125,000 will be taxed and first-time buyers will have to find even more money if they want to get onto the housing ladder.

Although lending criteria remain tight, there is clearly demand from new borrowers and for those able to provide the deposit, mortgages are cheaper than in recent years – the CML says the typical homebuyer had to commit just 12.8% of gross income to cover their mortgage interest payments in the third quarter of this year, the lowest figure since the first quarter of 2004.

Paul Samter , CML economist says: “As the end date for the stamp duty concession approaches, we may see sustained levels of activity at the lower end of the market in a traditionally quiet time."

If you want to avoid the extra 1%, you need to act now. Talk to your mortgage broker right away about securing a great mortgage deal before the new year comes along.

SOURCE: CML, 11/11/09

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