The chancellor revealed that he intends to keep stamp duty on properties worth up to £125k at 0%. With a 2% rate added on the portion up to £250,000 then 5% on homes valued up to £925,000, then 10% up to £1.5m.
For the majority of those who pay stamp duty (98%) the announcement will come as a welcome relief with average buyers in London seeing a reduction of around £4.5k on stamp duty costs.
Many believed that under the old system sellers had been holding back because of the cost of moving home, which had led to prices increasing.
Paul Smith, CEO at haart, was pleased with the announcement and had this to say:
“Top marks for the Chancellor today who has paid heed to the property industry’s long held concerns over the punitive Stamp Duty Land Tax which has disproportionately affected homebuyers and sellers in the South East. By introducing a progressive tax banding system there will be more winners than losers and the reform takes the steam out of the proposed ‘mansion tax’.”
James Wyatt, the Surrey Chair of the NAEA was less pleased with the announcement:
“The biggest losers in this budget are the hard working, aspirational property owners in the Home Counties.
The Chancellor has seen fit to stick needles in the eyes of some of his Party’s most generous supporters.
The already fragile property market will undoubtedly take a further hit and the only winners will be UKIP who can expect more support from Conservative members fed up with being taxed more and more.”
Some also felt as though it was likely to further stifle what has already been a subdued market at the very top end this year.
Edward Heaton, from Heaton and Partners property search agency comments: “I expect it to be shortlived. The reality is that buyers at the top end tend to come to terms with the costs involved in buying and they will ultimately take it on the chin. Unwelcome as this news might be to those of us in the industry, I don’t think this will make London and the UK any less attractive to international buyers whilst wealthy British buyers will also come to terms with it.”
Richard Sexton, director of e.surv, expressed his relief, saying: “Finally, the government has acknowledged the need to revisit the antiquated stamp duty thresholds. The clunky slab structure has been punishing British buyers for far too long.
In London the problem was particularly severe: first-time buyers in the capital pay an average of £270,000, meaning most first-time buyers were faced with significant fees before the changes. These extra charges have been pricing many of them out of the market. First-time buyers are already fighting an uphill battle with a lethargic labour market recovery and low savings rates meaning it’s difficult to save for a deposit.
Over the last twelve months the mortgage market has done an about turn, as new regulation has hit demand for homes. The reform of the stamp duty thresholds is an olive branch for aspiring first-time buyers and may help spur more activity at the bottom of the market.”
The latest research from Zoopla claims that the reforms could save house sellers over £200m a year, averaging at nearly £7500 each.
Zoopla found that the number of property sales in the price bands immediately before an existing stamp duty threshold is significantly higher than expected, while the number of sales in the price band immediately after a threshold – the stamp duty “dead-zone” – is considerably lower.
Lawrence Hall of Zoopla explains: “The new, graduated Stamp Duty system is a long overdue overhaul to what the Chancellor admitted was a poorly-designed tax and represents a fairer system for the vast majority of homebuyers. It also means that those selling their home at certain levels are more likely to achieve the real value of their homes and won’t be forced to discount their properties to sneak under certain bands. Unfortunately those buying property worth more than £937,000 may feel unduly penalised by the new reforms, but the new structure represents a more balanced system overall and a welcome alternative to the ‘mansion tax’ plans that had been proposed.”
The way to pay stamp duty will not change.
As before you will need to submit a stamp duty return and pay what you owe within 30 days of completing on the sale of your property.
