Good news for homebuyers!
In an announcement made Wednesday 3rd December, Chancellor George Osborne set out changes to Stamp Duty Land Tax effective of midnight on Thursday 4th December 2014 which look set to benefit “98% of homebuyers.”
The previous boundaries of Stamp Duty dictated that any property purchased over £125,000 up to the value of £250,000 resulted in a Stamp Duty payment of 1% of the full value of the property. Purchases above £250,000 generated Stamp Duty charges of 3% or the entire value, which led to rather steep increases for those buying properties just over each boundary. For example, someone buying a house at £250,000 would have paid £2,500 in Stamp Duty, but if the purchase went through for £250,100 the bill increased to a whopping £7,503, all because of an extra £100.
But not any more!
As of Thursday 4th December 2014, Stamp Duty will not be payable on the first £125,000 of a property price. Homebuyers will pay 2% on anything over the threshold up to £250,000. Then from £250,000 – £925,000 5% will be paid, then £925,000 – £1,500,000 will be taxed at 10%, with anything above £1.5million being taxed at 12%.
The changes will benefit the majority of homebuyers as most people will now pay less Stamp Duty. The graduated increases in rate are also preferential in comparison to the previous model whereby the applicable rate of tax applied to the entire value of the property.
These changes will be of benefit to many homebuyers in the Manchester area in particular, where before the change in rates, the average apartment costing £131,426 would result in a Stamp Duty bill of £1314, but after 4th December, this figure would be reduced to just £128.52, a saving of over 90%.
The purchase of an average semi-detached house in Manchester at £174,897, would result in a Stamp Duty bill of £1748, but under the new rules, this figure reduces to just £937.94, saving the buyer 47%.
In speaking to Mike Wilson, director of Philip James Wilson in Heaton Moor, he welcomed the changes with open arms, “Stamp Duty has become a real consideration for first-time buyers and also for homeowners with properties valued at the £125,000-£130,000 region. Many people would make offers to try and stay below the threshold for Stamp Duty, which in some cases, led to difficulties in selling for some homeowners, or led to owners accepting offers much lower than the asking price in order to save the buyer money. This new system looks favourable to the average homebuyer and homeowner in the current market.”
We have drawn up a table to show the difference in Stamp Duty charges and how much you could expect to pay in the future.
Those buyers who exchanged on their property before midnight on Wednesday 3rd December 2014 are able to choose which system they prefer to pay under. If you completed before 3rdDecember, but have not yet paid your Stamp Duty bill, you are still bound to pay under the old rules.
If you would like to check how the change in Stamp Duty rule might affect your house sale, please speak to your solicitor.
If you are interested in putting your house up for sale and would like a free, no-strings valuation, please contact one of our sales teams.
Didsbury and South Manchester – Philip James Kennedy – 0161 448 1234
The Heatons, Reddish and Denton – Philip James Wilson – 0161 431 5556
Manchester City Centre and Salford Quays – Philip James Manchester – 0161 828 8200
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