Stamp Duty Update from Aston Knowles
From midnight on Wednesday 3rd December stamp duty will no longer leap at each threshold but will rise gradually.
Previously buyers paid the percentage above thresholds on the entire purchase price. With the new system, the higher stamp duty levels will only be charged on the amount above each threshold, in the same way that higher rates of income tax are only charged on earnings above set levels.
Bands are now 0 per cent up to £125,000;
2 per cent to £250,000;
5 per cent to £925,000;
10 per cent to £1.5million and 12 per cent above that.
Previously they stood at 1 per cent above £125,000;
3 per cent above £250,000,
4 per cent above £500,000;
5 per cent above £1million and 7 per cent above £2million.
Who will pay less?
Under the new system anyone buying a home costing under £937,000 should pay less equating to approximately 98% of the market.
Those buying a £200,000 home will pay £1,500 instead of £2,000. The big positivechange is for those previously caught in the 3 per cent tax trap, someone previously hit with an £8,250 bill on a £275,000 home will now pay £3,750. Meanwhile, those buying a £600,000 home will now pay £20,000, compared to £24,000 before.
Who will pay more?
Unfortunately, buyers at the top end. Someone buying a £1million home will now pay £43,750 instead of £40,000, someone buying a £2,000,000 home will pay £153,750 rather than the current £100,000 levied just before the 7 per cent threshold kicks in.
But it is the very high priced houses which are affected the most. A £2.5 million home will see stamp duty increase from £175,000 to £213,750. Anyone buying a £4 million home will pay £393,750 in stamp duty – a 41 per cent increase from £280,000.
The market for properties over a million has been difficult over the past 12 months, with a positive start in 2014 the market became subdued as we entered the summer months. Prospective buyers refrained from committing to purchase mainly due to ongoing economic uncertainty caused by factors including the Scottish referendum, changes to the mortgage application process and potential interest rate rises. We consider the stamp duty increase may initiallyprolong the subdued market however, we hope the additional strain on the top tiers of the housing market will be accepted as we move into 2015.
On a positive note the local market for houses below a million has continued to show positive momentum. Properties boasting key characteristics such as catchment for outstanding schools, well-proportioned family accommodation, high quality interior finishes and being in close distance to Suttons excellent amenities including train stations, Sutton park and the Town centre continue to outstrip supply. The demand for property between £400,000 and £700,000 in Sutton Coldfield remains strong and is set to continue well into 2015.
Nationally, Knight Frank announced that Britain’s house price surge will slow down in 2015 as average property prices will rise by 3.5%, compared to years of double digit growth spurts.
However, according to the estate agent’s forecast for the residential property market in the UK, while the average UK house price will slow over the next year, it is set to rise 18.2% between 2015 and 2019.
Aston Knowles is positioned to provide best advice to existing clients as well as property owners contemplating a sale based on expertise in the area and experience.
For an informal discussion about the value of your home or indeed how the new stamp duty system may affect your property, contact our High Street office on 0121 362 7878.