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UK NEWS

Stamp Duty shake-up

Feb 03, 2015
On 3 December, 2014 the Chancellor George Osborne delivered his autumn statement, which included major changes to the way Stamp Duty is levied on UK property sales. Below are some of the comments we received at The Mover office following the Chancellor’s announcement.

Online estate agent eMoov.co.uk

Stamp Duty has become yet another hurdle for buyers across the country in recent years with the inflating cost of houses seeing many paying out thousands to cover the cost of the government tax on property.

However with an election fast approaching George Osborne has shaken up the Stamp Duty brackets in his autumn statement to benefit those buying at the lower end of the property market. It could be a last minute scramble for votes, but welcome news nonetheless for those looking to get on or move up the property ladder.

Although the reform sees an increased percentage paid on each price bracket the abolition of the slab structure means that those buying at the lower end of the market will save on the cost of Stamp Duty. In other words buyers will only pay the percentage levy on the proportion of the sale price at the new percentage rate.

So to put it into context, before today a house purchased at £260,000 incurred a 3% tax of £7,800. But the new changes mean from today a house purchased at £260,000 will only incur a charge of £2,999. For the typical buyer at an average purchase price of £260k this is worth a lot and should definitely encourage buyers to buy and therefore sellers to sell.

A recent survey of over 1,000 UK home owners by eMoov.co.uk found that 29% of those surveyed were deterred from buying altogether as a result of the cost of Stamp Duty. In London 40% of people feared the cost of Stamp Duty.  It is also little surprise that those buying a property over £500,000 (38%), one of the highest taxed brackets, would avoid buying as a result of the tax.

 

Alistair Bingle, Managing Director of Bishop’s Move

“The announcement of Stamp Duty reform has been a long time coming and will give the housing market a much needed boost as it ambles along its traditional pre-election slow-down. The Stamp Duty thresholds are clearly outdated and don’t reflect current prices – in fact these announcements should have been introduced earlier this year during the Budget. With the average cost of a UK home now £272,000 and £514,000 in London, easing the Stamp Duty bill for people at the bottom of the ladder and making heavier charges on those buying expensive homes, takes away the need for the much maligned Mansion Tax. Reducing the Stamp Duty penalty, which buyers face when crossing into a higher Stamp Duty tax band, will have a significant positive impact on getting the market moving by encouraging people to upsize. This will increase the supply of houses for first-time buyers, who are key to stimulating the UK property market.”

Jonathan Hopper, Managing Director of Garrington Property 

"Will the Chancellor’s dramatic change to Stamp Duty stop people moving into £1m plus homes? Absolutely.  This short-sighted change is very likely to put the prime market into a state of shock.  We have already had a client call in the last hour, wishing to reconsider their offer on a £4m property after the Chancellor’s announcement that Stamp Duty on such a purchase would be increased to a staggering 40% - effectively asking our client to find another £113,750 of net income.” 

”Whilst reform of the graduated system of Stamp Duty is logical and welcome, you do have to seriously question the timing in terms of scoring political points for the mass market, but placing a further significant headwind to the prime market, which has already slowed due to the uncertainty of a possible Mansion Tax and a change in government.”

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