If you’re in the business world, the housing market, or are buying and selling your home- it has been a big month! The Autumn Budget 2017 was presented in November, sending the UK into speculation for the forecast of the year ahead.
Many changes were announced that affect how we do business; for us estate agents there was one word on our lips… Stamp Duty!
How does stamp duty work?
Stamp duty land tax must be paid when you buy a property or land over a certain price in England, Wales and Northern Ireland. How much you pay depends on the property type and whether you’re a first-time buyer.
Let’s assume you’re buying a property for £500,000.
You pay nothing below £125,000, which is £0.
You pay 2% on between £125,000 and £250,000, which is £2,500.
You pay 5% on the value of the property above £250,000 and £500,000, which is £12,500.
So in total this means you’ll pay £15,000 (£0 + £2,500 + £12,500).
This is still the case if you are NOT a first-time buyer.
**Bear in mind that if you are purchasing an additional property (anywhere in the world) there is a 3% surcharge.**
Stamp duty abolished for all first-time buyers up to £300,000
Chancellor Phillip Hammond announced that stamp duty would be abolished immediately for first-time buyers buying property worth up to £300,000.
It is good to clarify what ‘first-time buyer’ means in this situation as it becomes slightly confusing!
- If you have inherited property or bought property abroad, you no longer are exempt from stamp duty tax. It is only if you have never bought or owned property that you are entitled to the new exemption.
However, in London, the median house price is typically over £300K.
To help those in areas of London where properties cost up to £500,000, no stamp duty will be paid on the first £300,000. The remaining £200,000 will elicit a 5% percent tax equating to £10,000.
This will likely have a positive impact on the London housing market and definitely help those people who haven’t been able to get on the ladder- get a foot up!
If you want to know how much stamp duty you will pay on a property you’re interested in, then online calculators are a great tool!
Use this calculator from Money Saving Expert for an estimate: https://www.moneysavingexpert.com/mortgages/stamp-duty
How the new law effects sellers and listed prices
In London, like the majority of the UK, for first-time buyers, there will not be any stamp duty tax on a property up to £300K. However, for properties over £500K in areas of South East London, there is no exemption of tax. This is because this becomes apart of the higher threshold and not eligible for the entitlement.
If you are selling your home it’s good news!
The Office for Budget Responsibility (OBR) said the main beneficiaries would be existing homeowners, rather than first-time buyers because it expects all house prices to rise by 0.3% within a year as a result of the change.
- The reasoning behind homeowners benefitting is that it’s likely there will be a surge of first-time buyers making their move on the market. It’s also a possibility that buyers may even increase their budget because of the initial exemption up to £300,000.
So if you are selling, there is an opportunity to open your home up to a bigger buyers market and the potential to sell your home faster.
Whether you are a first-time buyer or selling your home, our team are experts and will help you make the process as simple as possible.
Any questions about how stamp duty might affect you? Contact us at firstname.lastname@example.org or message us on Facebook or Twitter.