What do you think of the Stamp Duty changes announced last week – and what effect do you think they will have on the market?
You won’t be surprised to hear that like practically every estate agent in the country – except, of course, for those operating at the ‘country house’ end of the spectrum, or in prime Central London – I think the changes represent some of the best news the property market has had in years. And not before time, either!
After years of pleading and lobbying from everyone involved in the property industry, the government has finally acted to end the iniquities of the old Stamp Duty (SD) regime – so much so, in fact, that around 98 per cent of all buyers will be better off, in most cases to the tune of thousands of pounds. Only those people buying properties costing more than £937,500 will actually pay more.
Let me give you an example. The biggest problem with the old SD regime was the so-called ‘slab’ effect – which basically meant that if you paid just one pound over a threshold, you paid the new higher rate on the entire amount. Not any more! Like income tax, the new duty regime is progressive – which means you only pay the higher rate on the portion of the purchase price above the threshold. So, if you were buying a house for, say, £350,000, under the old system, you would have paid three per cent on the entire amount – ie, £10,500. Under the new system, you will pay two per cent between £125,000 and £250,000 (£2,500), plus a further five per cent on the extra £100,000 (£5,000), making a grand total of £7,500. In other words a saving of £3,000!
So, as I said, this is great news for the property market. The abolition of the unfair and archaic slab system will take the sting out of the tail for hundreds of thousands of buyers on the lower to middle rungs of the property ladder and put thousands of pounds back in their pockets, just when they need it most. At the same time, it will eliminate the distortion in property pricing that occurred when sellers tried to avoid the old duty thresholds, and therefore allow properties to be more fairly priced.
All in all then, it looks like 2015 is going to be a particularly lively year in the property market!