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Stamp Duty Land Tax

Two months have now passed since the surprise announcement in the Autumn Statement that the Stamp Duty rates would be overhauled, and so it seems an appropriate time to consider the impact of the changes. The Stamp Duty rates were drastically changed so as to make a graduated system which saved some people several thousand pounds overnight.

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January and February are usually quiet months in the property market as people get over the Christmas period. However, we have experienced quite the opposite this year. Across all of our five offices we have had the busiest start to the year that we can remember. Is this because of the Stamp Duty change? Arguably yes.

Savings in Stamp Duty

The average price of a UK home is £300,000, under the new system those buying in this region will save an average of £4,000 in Stamp Duty. It is not difficult to see why some people who may have been holding off from moving house have been encouraged to make the move as a result of the changes with savings like this.

In addition, these changes have allowed the market to open up, where historically it was held back due to the Stamp Duty thresholds at £125,000, £250,000 and £500,000. Buyers would not agree to purchase for just above these thresholds due to the significant increase in tax liability that would follow. As the system is now graduated, Sellers with properties around these thresholds can now realise the full value for their homes, and Buyers can stretch themselves that little bit further.

Kick Start for the Housing Market

The market has clearly benefitted from these changes, as well as possibly other factors such as the Help to Buy scheme and increased lending competition. Kick starting the housing market is obviously high on the agenda for the current government, with an election in a couple of months time things could be about to change, it will be interesting to see whether this new Stamp Duty regime will remain.