The New Regime
Chancellor George Osborne said that stamp duty will be cut for 98% of homebuyers in his Autumn Statement to the Commons. These changes came into effect at midnight on the 3rd December 2014.
Before the Autumn Changes the amount of stamp duty payable jumped at certain price levels. This system has been replaced by a graduated scale which works in a similar way to income tax. Under the old regime, if you were buying at £125,000 you would pay stamp duty at 0% but if you were buying at £125,001 you would have to pay stamp duty at 1% of the whole purchase price, being £1250! Under the new regime you now pay 2% tax on the amount over £125000 mark (until the next tax bracket which comes in at £250,001). So this means that if you buy a house for £130,000, you will now pay stamp duty of £70 rather than £1300!
The new rates are :
|Purchase price of property||Rate of SDLT (percentage of portion of purchase price)|
|£0 – £125,000||0%|
|£125,001 – £250,000||2%|
|£250,001 – £925,000||5%|
|£925,001 – £1.5 million||10%|
|Over £1.5 million||12%|
If you are currently in the process of buying a home here is a link to the stamp duty calculator. www.hmrc.gov.uk/tools/sdlt/land-and-property.htm . You will need to use an estimated date for completion and enter the purchase price of the property that you are hoping to buy.
Swings and Roundabouts
People buying at the more expensive end of the market have seen a considerable rise in stamp duty and this appears to have had an effect on house prices over £2m. Some experts have suggested that this will result in sellers of homes over this value having to reduce their prices by some 10%. A “mansion tax” by stealth?
In our region the changes have already had a positive effect and will hopefully bring first time buyers to the middle market, where they have historically been unable to compete because of the difficulty in finding the large lump sum to cover a deposit and stamp duty.
We can help
Hopefully the changes to stamp duty will see increased activity in the housing market. Here at Hartley & Worstenholme, we have experienced lawyers who are ready to look after both new and valued existing clients. If you would like to discuss the legalities of buying a Property or require an estimate of our costs, then please contact one of the conveyancing team.
Click here to contact either our Pontefract or Castleford office today.