The recent changes to Stamp Duty are set to make 98% of homebuyers better off. Stamp duty charges are now being treated more like taxation, whereby you only pay higher rates on the proportion of the purchase price which fall into different bands.
A house around the national average price of £275,000 will now cost £3,750 in stamp duty, whereas previously it would have been £8,250.
A quick guide to the new charges is given below:
|Purchase price of property||New Rates*|
|£0 – £125,000||0%|
|£125,001 – £250,000||2%|
|£250,001 – £925,000||5%|
|£925,001 – £1,500,000||10%|
|£1,500,001 and over||12%|
* New rates paid on the part of the property price within each tax band.
Opinion differs as to the effect these changes will have on the housing market. While many forecasters – including the Office for Budget Responsibility (OBR) expect prices to rise, the Centre for Economic Research and Development (CEBR) are predicting a o.6% fall in prices during 2015.
The CEBR acknowledge that the changes in stamp duty are likely to cause increased activity in the market, but their opinion is that this alone will not offset other factors, including the difficulty in obtaining a mortgage due to the new rules introduced in April 2014, the current glut of sellers, and an anticipated pre-election slow down in the market.