Posted: 13 January 2015 by Higgins Homes
Perhaps the biggest recent change to the UK property market has been the stamp duty reform that took place in December last year. Stamp duty is a tax that is paid by a buyer and charged on all land and property transactions the full name of this levy is Stamp Duty Land Tax but most people simply refer to it as stamp duty. Stamp duty has been something of a burden for buyers for many years, as the old British system was considered rather archaic. It was referred to as a 'slab structure' tax and applied a percentage tax to the entire purchase price of a property depending on the band that property fell into, regardless of whether the purchase price only nudged into that band by £1 or two. So, for example, if you were purchasing a property under the old system and you paid £250,000 for it you would be charged stamp duty on the whole purchase price at just 1%. However, if you paid £250,001 for the property you would have to pay 3% on the entire purchase price. Given the size of the figures involved, these percentage differences could mean a variation of several thousand pounds. Under the reformed system, the percentage of each band is only applied to the amount of the property price that sits within that band. The bands are as follows:
So, a £250,000 property will have no stamp duty charged on the first £125,000 and then the remaining £125,000 will be charged at 2%. The government has estimated that this simple change which is more in line with the current income tax system could mean that buyers could save around £4,000 on the purchase price of an average property. This change will also affect Higgins Homes properties for example, if you're buying in Oval Quarter you could save £2,300 in stamp duty for a one bed flat selling at £385,000. At the Arboretum it will now be possible to save £3,100 on stamp duty when buying a 2 bed flat or £4,500 when buying a 3-bed house. The changes to stamp duty have been designed to make it easier for buyers and sellers and the result is that many are saying there's never been a better time to buy. While house prices are predicted to continue to rise and values in the capital likely to remain as impressive as ever, if you're considering this kind of investment, now could well be the ideal time to make the leap.