The stamp duty reform revealed and put into place last week, should we see as good news or bad news? The initial positive is buyers purchasing property under £937,500 will save on their stamp duty bill but the projected outcome will be that property prices will rise again. So actually will the new structure benefit us at all? Previously many house prices were determined by stamp duty thresholds, for example going over £250,000 tripled the percentage of stamp duty to 3%
Did the old formation keep property prices in relatively good order? Here is the old structure for you to take a look at for residential property:
Purchase Price Stamp Duty Percentage
£0 - £125,000 0%
£125,001 - £250,000 1%
£250,001 - £500,000 3%
£500,001 - 1million 4%
1million - 2million 5%
over 2million 7%
As of 4th Decmeber 2014 this is what the reform looks like for residential property:
Purchase Price Stamp Duty Percentage
£0 - £125,000 0%
£125,001 - £250,000 2%
£250,001 - £925,000 5%
£925,001 - 1.5million 10%
over 1.5million 12%
Instant reaction is 'the percentages are higher!' yes this is true but the difference is you no longer pay stamp duty on the whole purchase price. You will only pay a portion of the total value that falls between each bracket. This is an example if you were purchasing a property with the old & new rates at the current average asking price of £273,000
OLD Rates
Purchase Price Stamp Duty Percentage Stamp Duty Paid
£273,000 3% £8,190
NEW Rates
Purchase Price Stamp Duty Percentage Stamp Duty Paid
£273,000 2% £2,500
(£125,000 of the purchase price falls within the second bracket £125,001 - £250,000)
5% £1,150
(£23,000 of the purchase price falls within the third bracket £250,001 - £925,000)
TOTAL £3,650
So this means a total saving of £4,540! Lets see what the near future holds for the property market.....
Beth Alexandra Property Specialists
